Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

NATIONAL DOCKWORKERS (STRIKE)

11.4 a.m.

The Secretary of State for Employment (Mr. Maurice Macmillan): With permission, Mr. Speaker. I should like to make a statement.
The National Docks Delegate Conference yesterday rejected the interim report of the Aldington-Jones Committee. As a result an official national dock strike started today.
The joint chairmen, Lord Aldington and Mr. Jack Jones, together with the members of their committee—working dockers, trade union officials and employers worked very hard to achieve a just and fair arrangement, which has been commended on all sides by those with the true interest of dock workers at heart.
I am sure the House will share my deep regret that the Docks Delegate Conference rejected these recommendations and that the ports are now stopped.
This strike will damage the interests of dock workers, for until it is over the men on the temporary unattached register cannot be offered permanent employment nor can the older and unfit dockers be offered the special severance terms.
The economic viability of the industry and the competitive position of British ports will also suffer; this must affect the capacity of the industry to offer secure long-term employment to dock workers
Many people will find it difficult to believe that the general body of dockers have fully understood what benefits have been rejected on their behalf by 38 delegates out of the total of 84 who represented them at the Docks Delegate Conference.
I have already discussed the situation with Mr. Jones and Lord Aldington. They are meeting today, and I hope means will be found to enable their proposals to be put into action and to get normal working resumed.
In the meantime, the Government are giving immediate consideration to the action they may need to take to protect the general interests of the economy and of the consumer.

Mr. Prentice: First, may I express on behalf of my right hon. and hon. Friends great disappointment that the Docks Delegate Conference rejected the Jones-Aldington Report by a majority of 38 to 28. Most of us who are concerned with the very difficult problems of employment in dockland, and who want to see a civilized way out of the situation, believe that the 28 who voted for the acceptance of the report were right in regarding it as providing an acceptable basis for a return to work.
But is not the right hon. Gentleman aware that no statement from him is realistic unless it recognises the great damage done to the situation by the operation of the Industrial Relations Act? Does he still not understand that the tragic and unnecessary events of the past week or so have produced a mood in which it is very difficult for moderate counsels to prevail?
I have two points on the immediate situation. The right hon. Gentleman referred in his statement to the meeting today between Mr. Jones and Lord Aldington. Will he assure the House that he and his Department will give any help they can in the present situation, particularly if any further help from the Government is needed to provide clearer safeguards than some parts of the report seem to provide on matters of employment? In particular, I ask him not to close his mind to a clearer statement on the question of unregistered ports, which is left in the Jones-Aldington report to the second stage of the Committee's proceedings. It might be helpful if something clearer were said about that at this stage.
It would be of some help if the right hon. Gentleman would now make a clear statement to the House that the Government have no intention of applying to the Industrial Relations Court for either a cooling-off period or a ballot, because if


they bring the Industrial Relations Act further into the situation, not only will it be useless but it may further exacerbate an already grave process.

Mr. Macmillan: I assure the House, of course, that my Department and I will give every possible help we can to the work which Lord Aldington and Mr. Jack Jones are doing. As to clearer safeguards, the second part of the Jones-Aldington recommendations made it plain that in this dispute it was not possible for the national ports employers to go any further than they did, because they are not primarily the people concerned, and that that side of the recommendations should be settled by negotiation. That was accepted by the working dockers as well as everyone else on the committee. Certainly, I cannot do anything about the unregistered ports. That was not a matter at issue in the committee's report.
I do not accept that it is the Industrial Relations Act that has done the damage. If those who are preventing the dock workers from going back to work are doing so because of the Act, they are putting their political prejudice before the interests of the dock workers. Naturally, as the Government have always made plain, the Government regard recourse to the courts as the last resort, but I cannot give an undertaking that the proper use of the Act will not be made. I hope that we can manage to find a settlement through the existing machinery of the Jones-Aldington Committee, and that we can find a way out of our difficulties very soon.

Mr. Edward Taylor: As many of the dockers, apart from Communists, do not appear to know precisely what they are striking about and as the delegate conference decision was on a minority vote, will my right hon. Friend confirm that he has not closed his mind to the possibility, at the right time, of a secret ballot in which the result might be completely different? Will he also confirm that there will be no significant changes in the cost of the Aldington-Jones proposals while this strike persists, because otherwise this would be regarded by many as further confirmation that militancy can pay?

Mr. Macmillan: The difficulty that arises in this situation is that the position

of the dock workers is clearly understood by a large number of people who have a great deal of sympathy. What they do not have sympathy with is a method of trying to solve by force, by blacking operations and other methods, the problem which the dock workers themselves and their representatives on the committee have negotiated. It is this that makes it plain that either the union or the law must prevent the use of force to settle a dispute which should be settled by negotiation. I have certainly not closed my mind to any possible methods of achieving this result.

Mr. James Johnson: Is the right hon. Gentleman aware that people like me in ports such as Hull, think that he is purblind, in fact that his vision is opaque, when he gets up and says that the Industrial Relations Act is not a factor in this? May I tell him, as a Humber M.P., that the biggest single factor is that of these unregistered ports and, although he may deny any obligation, he must turn his mind to this factor, which affects the whole attitude of people towards the present situation?

Mr. Macmillan: Whatever the rights and wrongs of the situation may be, it is quite clearly wrong to attempt to settle this type of matter by the use of force, and this is what is happening. This was made perfectly clear in the judgment of the National Industrial Relations Court. This is an attempt to preclude a settlement by negotiation by creating a situation where that negotiation could no longer apply. This is a situation which cannot be allowed to persist in a civilised country.

Mr. Tom King: Did my right hon. Friend hear the answer given this morning on radio by an independent observer who was asked which would be the first section of the community to suffer from this stoppage? The answer given was that it would be the dockers themselves. Is it not tragic that in driving away yet further orders for work from these ports, where the majority of dockers are employed, they will add to the tragic and difficult situation which we are trying to solve?

Mr. Macmillan: It is true that port employers, the union executive, the working dockers on the committee and a large


number of other people, including those who represent dockland constituencies, have tried to find a solution to this longstanding problem. Most of those concerned would agree that the Aldington-Jones recommendations are a basis for settlement. The tragedy is, as my hon. Friend says, that a few people have increased the natural emotion that dock workers feel and created a situation which makes it very hard to put this solution into action.

Mr. Mikardo: May I ask the right hon. Gentleman, not in any hostile way, to answer the question put by my hon. Friend the Member for Kingston upon Hull, West (Mr. James Johnson) and not to ride off on a different point? Does he not realise that this business of the unregistered ports, which to people outside may appear to be a secondary matter, is perhaps the greatest cause of irritation to the dockers in the registered ports, because they believe, with some justification, that port employers outside the national dock labour scheme are black-legging in a way in that they are getting profits from contracting out of obligations which other employers, their competitors, have undertaken?
May I ask him to accept that no other single action would conduce more to a reconsideration and a possible acceptance of the Aldington-Jones proposals, which we should all like, than doing something or making some move about the unregistered ports?

Mr. Macmillan: The situation in the context of the Aldington-Jones recommendations of the unregistered ports is totally irrelevant in fact.

Mr. Mikardo: Go back to the docks.

Mr. Macmillan: It may be relevant in emotion, but it is totally irrelevant in fact, because the first recommendation of the Aldington-Jones Report is that the temporary unattached register be abolished for an agreed period. Therefore there is full-time work for all dock workers within dockland. The second recommendation is that there should be negotiations about the vexed problem of the stuffing and stripping of containers and working in groupage depôts. That too was accepted. The third recommendation is that there should be special severance arrangements, and the Govern-

ment have agreed to provide money for these, for this interim period. Therefore the contribution or otherwise made by the employers in the unregistered ports is in this context totally irrelevant.

Mr. Peter Rees: In view of the great service which the unregistered ports are giving to the community, will my right hon. Friend please assure the House that he will give no support whatever to any move to prejudice their present position?

Mr. Macmillan: The situation that we have been trying to create is to give time for the second stage of the Aldington-Jones negotiations which, on all sides it is accepted, will lead to a situation whereby dock workers will have regular employers like other people in industry and where the need for a temporary unattached register, or anything of the sort, will disappear—where we can get the regularity and security of employment in dockland which it has been seeking for 200 years or more.

Mr. Pardoe: Is the right hon. Gentleman aware that while we may all be disappointed, as he is, at the refusal of the dockers to accept this report, we can hardly be surprised in the present situation which is clearly the worst possible occasion on which to bring reason to bear on the results of containerisation? Will he say whether the Government gave thought to the social effects of containerisation when they first came into office, and will he further say why it is only now that we have a report dealing with this problem? Is this not an example of gross miscalculation and lack of preparedness on the part of the Government?

Mr. Macmillan: No. I think that is a monstrous suggestion. Containerisation has been a problem which was anticipated by our predecessors in Government and ourselves. What was not anticipated by anyone, including the unions and all the experts, was the pace at which these changes would take place. What was also not anticipated was the effect they would have on movements from one port to another as the increasing rapidity of containerisation required larger and larger ships which in certain circumstances cannot get into certain ports.

Mr. Orme: Will not the right hon. Gentleman agree that he is asking free


collective bargaining to take place on this report—and no one denies that these are difficult negotiations—against the background of last week's events and the Industrial Relations Act? Since it is absolutely clear that he will not use the Act for a ballot or a cooling-off period, will the Government now recognise that in the interests of good industrial relations the Act should be suspended—

Mr. Skeet: No.

Mr. Orme: —and that industrial relations be allowed to take place in an atmosphere where there is conflict, but where there can be settlement? Can he answer this important question? There were 20 abstentions in the vote. That means that those people were not against the report. Why did they not vote for it? The reason is in the events of last week.

Mr. Macmillan: In fact, there were 18 abstentions. Why they abstained is not my affair; I do not know. But there were alarming militant demonstrations outside which may have had something to do with it. I very much wish that the hon. Gentleman had not made his suggestion. I took part in a television programme last night with some of the most militant dockers, who made it perfectly plain that it was not the Industrial Relations Act to which they were objecting; they said so in public. I hope that right hon. and hon. Members opposite who have the interests of dockland at heart will separate whatever struggle they may choose to carry on against the Act from the present position in dockland and will not encourage dock workers to stay out because they object to the Act but will encourage them to go back to work and to deal with the situation in dockland.

Mr. Geoffrey Finsberg: As hon. Members opposite claim that it was the imprisonment of the five men last week which caused this trouble, has the attention of my right hon. Friend been drawn to the poster saying, "Five trade unionists are inside", published by the London Port Shop Stewards and printed by Briant Colour Printing "during their work-in in June 1972"? Does not this confirm what the Economic League and the Daily Telegraph have been saying

—that this has been a plot based on evidence which has been available for six months, that the militants intended to cause a national dock strike, and that they were merely looking for a sham excuse?

Mr. Macmillan: If the leaflet was printed in June, it shows, I think, some intelligent contingency planning which presumably had certain things in mind. It was, as far as I can judge from the date, printed when I was discussing some of these problems in an international context at the International Labour conference in Geneva.

Mr. William Hamilton: Does the right hon. Gentleman realise that there will be a considerable degree of disappointment and incomprehension that a scheme approved by such unlikely characters as Jack Jones and Lord Aldington—"unlikely characters" in terms of political and other views—is not acceptable? Does he not agree that the atmosphere has been poisoned by the Industrial Relations Act and all which has flowed from it?
The right hon. Gentleman talked about the use of force. There are very temperate trade union leaders and other workers who regard the Industrial Relations Act as a measure of force, that the Government have used the courts for party political purposes and that unless the Government realise that and agree to make some modifications to the Act there will be a continuation of this kind of trouble not only in the docks but else-where? Will the right hon. Gentleman give consideration to that and be big enough to admit that this is a factor in the situation? Meanwhile, what will he do about the introduction of emergency powers to protect perishable commodities now standing at the ports?

Mr. Macmillan: I have already said in my statement that the Government will be giving urgent consideration to the need to protect the economy and the consumer. As to the rest of the hon. Gentleman's question, my right hon. Friend the Prime Minister, myself and other members of the Government have made it plain that, at the proper time, we are perfectly prepared to consider representations about the workings of the Act. What we are not prepared to consider is any weakening of the Act which allows


irrational and illegal forces to operate successfully.
In the circumstances of the last few weeks, the men who were put in prison were carrying out acts which were deplored by their union officials and, indeed, by right hon. and hon. Members opposite. All that the Act says is that if a union cannot stop this the law should. Most people would not, I think, find that an unreasonable proposition, considering that there was general agreement that these actions were, by any definition of the term, a totally unfair industrial practice.

Mr. Bruce-Gardyne: May I revert to the question asked by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor)? Is my right hon. Friend aware that those of us who represent areas where earnings for a full working week are frequently substantially below the level of the dockers fall-back pay for no work at all find the offers of financial assistance on behalf of the taxpayer in the Jones-Aldington Report somewhat excessive and might not be altogether regretful if, in view of the rejection of the report, those offers were withdrawn? In any event, can my right hon. Friend assure the House that in no circumstances will these offers be extended and increased?

Mr. Macmillan: There is no question but that the Jones-Aldington proposals can be accepted by the dock workers on a resumption of work. It is not physically possible to implement them otherwise. Government assistance was limited to severance payments for voluntary severance for the older and unfit workers in the docks who, particularly in London, preponderate. The main object was to give secure employment in dockland to young, fit workers on a more permanent basis. I would point out that in the rundown of the docks there has been no question of anything but voluntary severance. I sincerely hope that right hon. and hon. Members opposite will do everything they can to persuade the dock workers to accept the Jones-Aldington Report as a basis for negotiation.

Mr. Kinnock: Following the question of the hon. Member for Hampstead (Mr. Geoffrey Finsberg), will the Secretary of State look under the bench to see

whether there are any "reds" there making some intelligent contingency plan, as he said earlier? Does the right hon. Gentleman realise that, as a result of his failure to answer the questions of my hon. Friends the Members for Kingston upon Hull, West (Mr. James Johnson) and Poplar (Mr. Mikardo), he shows an abysmal lack of understanding of the context in which the dockers are taking action? Does he admit that his compliments to Jack Jones are disingenuous and cynical in view of the fact that he is prepared to be a member of a Government which will not do anything to stop the system whereby Jack Jones, in spite of his great public service, has been kicked in the teeth this week by the decision of the Law Lords?

Mr. Macmillan: On the last point, Mr. Jones made it perfectly plain last night that the union of which he is the chief employee, if I may put it like that, is responsible for the delegated powers of its shop stewards, of whom there are 30,000. He also said that it was difficult, in a democratically elected society such as the Transport and General Workers Union, to control those shop stewards. I accept both points. What I do not accept is that that proposition justifies shop stewards in taking illegal action and conducting unfair industrial practices without the possibility of their being prevented from doing so either by the union or by the law.

Mr. Redmond: May I follow up the questions asked by my hon. Friend the Member for Bridgwater (Mr. Tom King) and two hon. Members opposite about the small ports? Surely the terrible history of strikes in dockland, particularly at the big ports, has been driving business to the smaller ports because shippers cannot rely on them? Is it not a fact that we cannot improve on the Jones-Aldington Report and that we would not have had that report but for the action of the National Industrial Relations Court?

Mr. Macmillan: What we are trying to do is to ensure that the larger ports, the ports which have a long history of difficulty, become fully competitive and can share with the unregistered ports a capacity to compete with the increasing ability of the continental ports to take deep sea traffic away from us.

Mr. Clinton Davis: Is not the Minister suffering from hallucinations when he suggests that the Industrial Relations Act has nothing to do with it? Where has he been in the last few days? Has he been, for example, to Midland Cold Storage in my constituency where he would have seen USDAW members protesting with the dockers against what was happening? Is it not also clear that what has been done by the Prime Minister, the national disaster sitting next to the Minister, in the last few days, is to give even greater irritation and pre-plexity to a very difficult situation? Would he not now make a dramatic and conciliatory move by saying that now and not at some time in the future the Government will consider changes in the Act?

Mr. Macmillan: We have made it perfectly plain that the Government are prepared to consider changes in the Act if they are properly put forward in due course. What we are not prepared to do is to give way to the sort of pressure that the hon. Member is trying to put on us. I hope that it is not the Act which is holding up a settlement in dockland, because if it is it means that those who are advocating this have the political interest of repealing the Act more at heart than they have the working interest of the dock workers.

Mr. Prentice: May I put a further point to the right hon. Gentleman? We

all hope that the talks between Jack Jones and Lord Aldington later today will provide a basis for a speedy return to work. Will he carefully reconsider what he said about unregistered ports—that they are not relevant? They are very relevant, as was recognised by the Jones-Aldington Report itself, in which it was said that part two of their consideration would be to consider this question. So obviously it is relevant to the level of employment available in dockland. Would the right hon. Gentleman make some declaration of intent which might lead the Government and the other parties to bring these ports within the dock labour scheme? Some declaration now, today or in the next few days, could be very helpful in this situation.

Mr. Macmillan: I am very anxious to do what I can to help, and the right hon. Gentleman, indeed, has shown that he too, is trying to help in this difficult situation, but I do not think that the last part of that suggestion is very helpful. The Jones-Aldington Report makes it plain that this was one of the issues which should be considered in the period of five months designed to achieve quiet consideration, and I think it should be left there. I do not think we should select one part or another of the suggestions for prior consideration of those put forward in the report itself. This was accepted by the dock workers, including the working dockers on the committee.

Orders of the Day — INDUSTRY BILL

As amended (in the Standing Committee) considered.

New Clause 1

ASSISTANCE TO IMPROVE TOURIST AMENITIES AND FACILITIES

'(1) In the exercise of his powers under section 7 of this Act, the Secretary of State may provide financial assistance to the tourist industry in assisted areas by making a grant or loan to a Tourist Board, as established under the Development of Tourism Act 1969, to enable such a Board to prepare and finance approved schemes and projects as provided for in sections 3 and 4 of that Act.
(2) Not less than £20 million shall be granted or loaned by the Secretary of State, in accordance with the provisions of this section, in each year up till 31st December, 1977'.—[Mr. Hicks.]

Brought up, and read the First time.

11.34 a.m.

Mr. Robert Hicks: I beg to move, That the Clause be read a Second time.

Mr. Speaker: With this new Clause it would be appropriate to consider also new Clause 4 (Services and office employment), new Clause 6 (Machine tool industry), new Clause 7 (Shipping) and Amendment No. 14, in Clause 7, page 8, line 24, at end insert:
'(g) to encourage the proper distribution of employment in the service industries and of office employment'.

Mr. Hicks: I do not think that hon. Members on either side of the House will dispute that the tourist industry makes an important contribution to the economy both nationally and in the regional context. Certainly this was recognised by both sides in the Committee on the Bill, but I think it may be helpful if I briefly summarise the industry's most significant contribution in statistical terms.
In 1971 there were an estimated 7 million visitors from overseas to the United Kingdom. This compared with 6·7 million in 1970 who contributed £433 million in earnings of foreign currency to this country. The final earnings figure

for 1971 is not yet available but if one looks at the figures for the first three quarters of that year and compares them with the figures for the corresponding period in 1970 one sees that there is an increase, and it is fair to assume that the final figure will make it another record year for earnings.
In terms of domestic employment the tourist industry must not be under-estimated. Hon. Members will appreciate that it is difficult to represent the importance of the tourist industry in statistical terms since this industry is not classified as such in the employment statistics, but the annual count of persons employed in catering, hotels and associated services shows that in June, 1971, 559,000 persons were employed. I think hon. Members on both sides would agree that the tourist industry thus makes a very healthy contribution to the economic scene. More important in the context of the Bill is the implication that the importance of the industry will increase in the future.
The regional importance of this industry is equally impressive. If one examines the existing development areas one sees that tourism makes a contribution to most of those regional economies. For example, in the Northern area, which one tends to think of in terms of problems of shipbuilding, coal mining and so on, there is the Lake District, an important tourist area. Likewise in Scotland there are the Highlands and Islands, and in Wales its central and western parts.
However, it is the South-West from which I should like to draw my illustrations of the importance of this industry. It is estimated that some 3 million visitors come to Cornwall annually and the income to the county exceeds £50 million. Tourism is now the Duchy's largest single income earner, since its income has now surpassed the revenue derived from agriculture, horticulture and fisheries. In the South-West region, which includes the South-West development area, some 50,000 people are employed in tourism.
These few statistics provide ample evidence of the importance of tourism both to the national economy and to the regional economies, but there is one additional point to be made:that the Bill is a regional development Bill as well as an Industry Bill. The problems of the various regions which were classified as


development areas or intermediate areas vary. Thus the techniques for solving them also will vary, and so a flexible approach should be used to solve these problems. No region has suffered more than the South-West from the inflexible approach of the past.
That is why I believe special provision should be made through the Bill to assist the tourist industry on which the South-West relies very heavily. To look at the immediate future, there are two main ways in which the tourist industry may require help. Hotels and restaurants may require assistance to undertake necessary extensions or modernisation; new hotels may require to be established in the area. Prior to the passing of the Development of Tourism Act, 1969, such premises could qualify for investment grants under the Local Employment Acts provided they satisfied the employment criteria. With the assistance of that Act the hotels were enabled to obtain financial assistance for capital expenditure schemes. The 1969 Act has worked well, I think, but it placed a definite time limit because the work had to commence before a certain date and has had to termiante this year. Because the Bill restricts the number of qualifying activities, the tourist industry, and particularly the hotel and catering trade, could suffer. It is very difficult to quantify in cash terms, but unless we make special provision now there will be a potential future loss.
The second area in which the tourist industry could need assistance is that represented by the approval of moneys for special or approved projects. The Government at present make £1 million available for this purpose under Section 3 of the Development of Tourism Act. Of this sum the English Tourist Board gets half and the other two boards share the remaining half. In his statement in the autumn of 1970, my right hon. Friend the Chancellor of the Exchequer said that this aid was to be confined to development areas and not extended to other assisted areas. That means that projects in intermediate areas cannot at present qualify. I shall refer to the significance of this in a moment or two.
The basic situation is that the demand for money for approved projects far

exceeds the amount available. The present £1 million is inadequate. From the 1971 report of the English Tourist Board, one sees that from all the development areas in England some 484 applications were made of which the board was able to assist only 76. From the South-West development area the board received 234 applications but only in respect of 23 could help be given. The helping ratio was 10 per cent.
When I took this matter up with the board I was told in no uncertain terms that it would have wished to help many more projects than the 10 per cent. I have mentioned. A large number of projects were supported by the regional tourist boards to the centre for assistance, but because the board had only £½ million to allocate to all the development areas it was not able to assist all those projects which it would otherwise have wished to help. That being so, I believe that more money should be made available. Since in other Clauses we are making money available to other important economic activities, I feel that because of the success and importance of the tourist industry both nationally and regionally we should name the sort of figure to be made available each year.
One must not under-estimate the importance of these approved tourist projects to the South-West. All sorts of schemes have been helped:conventional projects such as the building of swimming pools and also less conventional and orthodox schemes such as the reservicing and reopening of old mineral railways on Bodmin Moor as a tourist attraction. Attractions of that sort need help, so £½ million for the whole of England seems inadequate.

11.45 a.m.

The development areas and intermediate areas have boundaries drawn on the basis of industrial activity, unemployment statistics and so on, and the needs and requirements of the tourist industry are not specifically taken into consideration. Of my constituency, three-quarters is in a development area but the remaining quarter falls within the Plymouth intermediate area. That area is, in effect, the Tamar Valley, which historically relied on mining, quarrying and horticulture. The first two have virtually ceased and horticulture is declining.


The best chance of securing the economic recovery of this part of my constituency is through development of the tourist industry yet, because it falls within the Plymouth intermediate area, approved tourist projects cannot qualify for financial assistance. This is a complete nonsense, and I ask my right hon. Friends to widen the assistance to include all assisted areas rather than only development areas.
There is ample evidence that the tourist industry will play an even more important rôle in the future both nationally and regionally. Money will be needed for the further development of the hotels and restaurants side as well as for approved projects, so I earnestly ask my right hon. Friends to give close consideration to the views I am putting forward. I think that for once we should be backing a winner, because if large sums of money are forthcoming from the centre we will see a very real step forward in the type and quality of projects which it is very necessary to establish, not only to attract visitors from overseas but, once they are in this country, to get them away from the London-Stratford-on-Avon-Cambridge triangle and out into the regions.

Dr. David Owen: I support new Clause 1, particularly with its reference to the South-West. I also wish to make a passing reference to the new Clause 4 and Amendment No. 14 which draw attention to the importance of the service industries.
Many times in the House I have pleaded with my own Government, and now with the present Government, that they should look at regional policy with a far greater degree of flexibility than has been apparent in most legislation. In particular, in the South-West we face the very difficult problem that whereas so much regional aid is directed to industry one of our major industries is tourism, and the House has already had statistics to show that the South-West is still the country's largest tourist region.
It is also true to say that the South-West does not attract the percentage of overseas visitors that many of us would like to see. To a great extent this is due to the fact that the region's tourist facilities are grossly under-developed. The 1969 Act has undoubtedly made a major

contribution to improving those facilities, but anyone looking at the position must accept that a very large part of that financial aid has been concentrated on London and many existing tourist centres while not nearly enough has been diverted to the outer regions, such as, in particular, the South-West.
When we talk of tourist aids we talk about aid to hotels, but it is very important that we should not look on aid for building hotels and improving hotel and restaurant facilities purely from the point of view of tourism. In Plymouth we have seen a marked improvement in the provision of hotels, but accommodation is still inadequate. There is no doubt that an industrial city is greatly helped by having adequate hotel facilities. It is a very important part of industrial aid to see that hotel facilities and requirements for visiting businessmen and industrialists are adequate.
I make the plea for extra aid for hotels. First, under the present Act, aid should go out from London to the outer regions and should be aimed first at tourism, as obviously that is the largest growth industry; but also we should take account of existing industrial areas. Here it becomes very important to extend this aid far wider than merely to development areas and to take in the intermediate areas. In cities such as Plymouth there has been an improvement, but there is need for greater improvement.
On the next aspect, at long last the Government are converts to the need for regional incentives and very substantial fiscal help. We have seen a quite remarkable conversion. The Bill is rather too closely aligned to industry. I should prefer to see it much more regional in context. It is regional aid we are discussing. Substantial sums of money are involved in the Bill. We are asking that this money should be used in a flexible regional policy.
The service industries are expanding all the time, but this expansion is taking place in the prosperous regions of the country, the congested regions of London and the big cities. There is an urgent need to get office development and service industries from these congested centres into some of our poorer regions. That is crucially important in the South-West. We are very unlikely to attract


the sort of major industry we want. We want it and we will do everything we can to get it. We want car factories and petrochemical complexes, but this may not be possible. There are other areas of high unemployment with a traditional industrial background which may be the most attractive and, perhaps, worthy areas for this sort of industry.
We in the South-West have an attractive environment. It is the sort of place in which people want to live. It is a very attractive place for service industries and office facilities and for decanting major office complexes from the big cities. The Bill should place far greater emphasis on the lines of Amendment 14 to encourage service industries.
Plymouth is an industrial town mostly dependent on the dockyards. We need new industry. We are of intermediate area status. That was given by the Labour Government in 1969. In the first few years it had a dramatic impact. During the severe economic problems of the last 18 months, the initial impetus has to some extent slowed down. I hope that it will pick up again.
It is not just industry that we need. We need offices. The Government could do a great deal more than they have done to bring Government offices down into the regions. We also need to attract people who are setting up large office complexes, such as insurance companies and banks. We want them to move out from London. This has been done extremely effectively at Swindon. It needs encouragement and financial aid. It is a vital part of regional development.
The Government have been converted to the need for Government money for regional aid in a quite remarkable transformation. I understand the concern that this causes among some die-hards on the Government benches. But my plea is that the Government should go a step further and use that money flexibly for a regional policy which pays adequate attention to the importance of the tourist industry for some of these areas and, in particular, to the growth of the service industries and the need to take service industries and office developments out of the congested centres to the periphery, to areas such as the South-West. These areas are attractive and people want to

live in them. Distance need not be a problem. The Government should give special fiscal incentives so that we can build up this sort of employment and ensure that we retain young people in our region.
One of the most depressing situations is the continuing depopulation among the young which is taking place in the South-West. There is a great influx of old people. We need the dynamic of retaining our young. We can do that only with a broad range of industrial and service industry development. At present we are markedly imbalanced. I urge the Government to show a greater degree of flexibility in the way they distribute and use the money provided by the Bill.

Mr. Alan Williams: I appreciate the concern of hon. Members on the Government benches that two successive speakers have risen from the Opposition side of the House. I am grateful, Mr. Deputy Speaker, for your co-operation in this matter. It seems a little awkward that we should be discussing a group of new Clauses and an Amendment all but one of which have been tabled by the Opposition and have not been spoken to. It might be for the convenience of the House and it might ease our discussion if I state as succinctly as possible the case on the new Clauses, although many of my hon. Friends will wish to speak.
I put down new Clause 7 with great personal regret because, as hon. Members who served on the Committee will recollect, the Amendment relating to shipping was moved by one of my hon. Friends.

Mr. David Crouch: On a point of order. Had I already been called to speak in the debate, Mr. Deputy Speaker, I should have made this point as a point of order. The hon. Member for Swansea, West (Mr. Alan Williams) is now raising new Clause 7. I think that the Chair's selection of Amendments is somewhat strange. I do not wish to cast any reflection on that selection, but we were beginning a debate on the service industries. I know that hon. Members on both sides of the House are extremely interested in this matter and feel that it should be considered by the House. While we must obviously discuss the important new Clause to which the hon.


Gentleman is referring, it is a pity to disrupt the start of consideration of the tourist and service industries.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): As always, the selection of these matters is for Mr. Speaker, and that selection has been made.

Dame Irene Ward: Further to that point of order, Mr. Deputy Speaker. I happen to be interested in both subjects and I am looking forward to speaking to both. I do not understand why we have to get off tourism to get on to shipping. I have a great deal to say about both. It is very important to discuss tourism because the Treasury does not know much about it. Are we supposed to be discussing both, Mr. Deputy Speaker, or shall we not hear from anyone on the Government side of the House with regard to tourism before we get on to shipping?

Mr. Deputy Speaker: I am sure that the House was not surprised, though delighted, to hear that the hon. Lady had much to say on both these matters. The selection has been made.

Mr. John Biffen: On a point of order, Mr. Deputy Speaker. The fault may be merely my lack of grasp of procedures, but as these new Clauses and the Amendment have been grouped together may I ask whether any hon. Member who succeeds in catching your eye can speak only once, so that when my hon. Friend the Member for Tynemouth (Dame Irene Ward) wishes to speak on tourism and on shipping she has to regale the House with a composite speech encompassing both subjects? May I respectfully suggest, Mr. Deputy Speaker, that this would be a most unsatisfactory way to proceed?

Mr. Deputy Speaker: I hope it will prove that the hon. Member is incorrect concerning the unsatisfactory nature of the procedure. He has, however, correctly interpreted the procedure.

12 noon.

Mr. Alan Williams: I approach the Box tentatively once more. I am grateful for the obvious support I shall receive

from the hon. Member for Oswestry (Mr. Biffen) because, instead of two subjects. I must speak to three or four subjects.

Dame Irene Ward: Who will reply from the Government Front Bench? They are not competent to reply—

Hon. Members: Hear, hear.

Mr. Deputy Speaker: Order. Whom the Government wish to put forward to speak for them is not my affair.

Mr. Williams: Having sat through all the debates in Committee, I assure the hon. Lady that the level of competence will not vary, no matter who speaks from the Government Front Bench. Indeed, many of the new Clauses and Amendments have been tabled yet again because in Committee we despaired of discovering what the Government's thinking was.
On a personal level, I am sorry to be propounding the Clause relating to shipping, because my hon. Friend the Member for Barrow-in-Furness (Mr. Booth),who dealt with the matter in Committee and who had conducted a great deal of research into it, has unfortunately been taken seriously ill and is in hospital. I am sure that hon. Members on both sides will wish my hon. Friend well and hope that he will soon be back with us.
Hon. Members who served on the Standing Committee will recollect that my hon. Friend advanced a well-documented case in support of the shipping proposition and said that he recognised there was a time lag, from the very nature of the way that statistics are compiled, between the date of ordering and the time of reporting orders. Therefore, the statistics can be slightly misleading. For example, some of the orders which were listed for last year would have been placed much earlier. I shall not weary the House by regaling the full length of statistics. They are on the record for those who wish to see them.
What became clear in Committee was that the concern expressed by the Chamber of Shipping and by the Shipbuilders and Repairers National Association seemed to be legitimate. There is a worry here. It is not a party political point; it is not something which I imagine will divide the parties. There is


a real difficulty which my hon. Friend summed up in Committee in this way:
British shipping companies are no longer contracting for ships…In the first quarter of 1972 orders for 0·3 million tons were placed—1·4 per cent. of world orders".
whereas
In July, 1970, 15·5 per cent, of world shipping orders were for United Kingdom shipping companies."—[Official Report, Standing Committee H, 13th July, 1972; c. 739–40.]
That was at the very time when Japanese shipping companies, far from contracting their ordering, in the last six months increased their orders from 19·6 million deadweight tons to 30·9 million deadweight tons.
The contrast is obviously singularly marked. It is also alarming in its future impact on employment in the shipbuilding industry and on our future invisible earnings, because the shipping industry is a major foreign currency earner, despite the fact that on the shipping account we are already in deficit.
The disturbing proposition advanced by the Chamber of Shipping is that by 1975 we could have a deficit on the shipping account alone of £200 million. I accept that this is a lobbying statistic which may contain a wide margin of error, but no Government can contemplate calmly the possibility of a deficit of £200 million at the end of the next three years, particularly as the amount of cargo transported by shipping has doubled in the last ten years. Obviously, the position quacontracting orders will affect the shipbuilding industry and, in the medium term, our foreign earning capacity.
As to the new Clause relating to machine tools, our concern arises in the light of the latest investment trend statistics. It is very disturbing to learn that in the last six months between the two reports there has been the biggest decline in business confidence and in expected investment that there has been for nine years. This is despite the Budget, despite the publication of the Bill and information on it being available to industry and even though industry now has the assurance that we are to enter the Common Market—or it appears that we are to enter the Common Market. We were told in the early stages of the Common Market debates that all that industry

was waiting for was the green light to start investment. It seems that industry has suddenly become colour-blind.

Mr. Nicholas Ridley: Is it not possible that the very generous grants and subsidies of two or three years ago for the shipping industry resulted in the bringing forward of orders and over-ordering by ship-owners, who are now naturally having to cut back? Could not this be an argument against distorting the normal economics, because it will result in more bunching and thinning of orders in the way I suggest?

Mr. Williams: It is well known in the House where the hon. Gentleman wants to cut back in the shipping industry. I do not accept his proposition. It is not substantiated by the evidence of shipping orders being placed by shipping companies from other countries. No doubt the hon. Gentleman will have a chance to regale us with his unique points of view.
Therefore, it seems that there has not been the upturn which was to have been expected from a give-away Budget, from a Bill which proposes very large subsidies and from the open sesame of entry into the Common Market. None of these things has triggered off the investment we want, despite assurance that each one of them would do just that.
Against this background, we are concerned for the machine tool industry because its orders are closely related to the level of confidence prevailing in industry generally. For this reason, the Government should accept the Clause relating to machine tools.
The major portion of the debate will probably turn on the services, on tourism and on office development. For that reason I have left this portion to the end of my speech, because I shall deal with this at slightly greater length.

Mr. T. H. H. Skeet: Under the terms of Clause 8 of the Bill the Minister is empowered to do almost anything. He would be able to bring forward a plan on machine tools if that were worthwhile.

Mr. Williams: One of the things the Minister can do when replying to the debate is to indicate what he has in mind.


We may well feel after the assurances we receive from him that it is not necessary to divide the House. I have a strong suspicion that any proposition of the Minister which suggests to this side that it is not necessary to divide will convince many hon. Members opposite, particularly the hon. Member for Oswestry, that it will be necessary to divide the House. However, it will be useful for the House to hear just what proposition the Minister has in mind.
On Friday, 28th April, 1972, Mr. Campbell Adamson, Director-General of the CBI, said this at Manchester Town Hall:
In our opinion, the number of mobile jobs in manufacturing industry in the 1970s will be limited, but the service industries will provide new opportunities for employment, and positive action is necessary to give the assisted areas a fair share of such industries.
In Committee we urged that where service industries and office organisations were potentially mobile, the Government should give assistance to encourage that mobility and attract them to the development and assisted areas.
It is depressing that, after two years in office, the Government are still awaiting their internal report on the future distribution of Government offices. As yet, there has been no meaningful follow-up from the present Government to the dispersal of such units as the business statistics office to Newport or even the motor taxation department of the Ministry of Transport to my own city of Swansea.
As for the private sector, at a meeting with businessmen the other day at which other hon. Members were present we were given in confidence certain information about the future siting of a headquarters which is at present in the centre of London. I shall not name the firm because I was told in confidence. I was appalled to learn that the company in question, which could have gone anywhere and whose major competitor is sited in the North of England and is a very effective competitor despite that allegedly disadvantageous siting, has decided that the headquarters must be within the commuter belt. It is that sort of intransigence which the Government must somehow overcome.
In Committee, by some probing questions my hon. Friend the Member for

Glasgow, Craigton (Mr. Millan) obtained some staggering answers from the Minister. He established that between 1969 and 1972 the number of office development certificates in the South-East more than doubled and that in central London office development certificates, which accounted for 6·3 million sq. ft. in 1969, were issued for 12·2 million sq. ft.—virtually double—in 1971; and in the first quarter of this year the trend is still accelerating. Thus under the present Government, far from there being an attempt at least to sustain a policy of encouraging offices to go outside greater London, there is in fact an accerelation in the concentration of offices in this area.
It must not be forgotten that, whether it be general service industry or office development, while firms remain determined to build in the congested areas, that very congestion will be perpetuated and aggravated, attracting young people away from the unemployment areas and leaving behind in those areas an age-imbalance in the population pattern. In some of the Welsh valley communities, for example, there is an ageing population pattern.
The gravity of the problem must not be underestimated. I think that many hon. Members on both sides—though probably more on the Government side—feel that we are just carrying on with the sort of situation which has prevailed hitherto. In fact, the situation has deteriorated so markedly in the last two years that we need a greater intensity of attention to the service sector if there is to be the slightest hope of giving adequate employment assistance to the development areas.
The Department of Employment's quarterly estimates of employment in Great Britain show the shattering statistic that in one year, between December. 1970, and December, 1971, employment in three of the development areas, in the North, in Wales and in Scotland, fell by 107,000—far more than the nominal increase in unemployment in those areas—and of that total 97,000 were lost jobs for men. Thus, on the employment front, we see a partially concealed reduction in jobs available which seems to be selective in hitting jobs for men particularly hard.
Also, in the period since 1st January, 1970, over 450 manufacturing establishments have closed in Scotland, in Wales and in the North and industrial jobs in the pipeline have fallen by 50,000 in the development areas. At the same time, industrial development certificates for new industries lined up to come to the development areas were 60 per cent. higher in 1969 than they were last year.

12.15 p.m.

We face not simply a massive job loss situation but clear indications that the amount of footloose industry which is available to help in the future to mop up the unemployment is markedly diminishing, which suggests that the problem in the development areas will be far longer-lasting than the present Government, and certainly our Government, would have wished.

It will be a massive task to restore the damage done in these last two years. We shall not only have to provide more than 500 firms to replace the old firms in the development areas as a whole but we shall have to provide over 150,000 jobs simply to make up for job losses and jobs in the pipeline used up by the present Government and not replaced. The Government have created an unemployment crisis in the development areas unprecedented in the post-war period. It is more deep rooted than the unemployment problem has been in the post-war years hitherto, and the abandonment of the regional employment premium will make recovery from the situation even more difficult.

In such a context, my submission is that the magnitude of the problem is now so vast that we must not ignore the potential employment opportunities available to us in the service and office sectors. It is against that background of depressing deterioration in manufacturing industry in the development areas that we put our proposals to the House.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): Dr. Dickson Mabon.

Mr. Bruce-Gardyne: On a point of order, Mr. Deputy Speaker. We all appreciate that the selection of hon. Members to speak and the order in which they are selected is entirely a matter for the Chair, but it will not have escaped your notice that there is by no

means a balance of numbers between hon. Members on each side of the House seeking to catch your eye. In the circumstances, I respectfully ask whether it might expedite a more balanced conduct of our proceedings if there were an even selection of speakers, since the number on the Opposition side will be rapidly exhausted anyway.

Mr. Deputy Speaker: The hon. Gentleman is perfectly right in the general considerations which he expresses, and I hope that he will find that things will even themselves out in due course.

Dr. J. Dickson Mabon: I quite understand the point made by the hon. Member for South Angus (Mr. Bruce-Gardyne). I only hope that, if trouble happens the other way, he will quickly stick up for us as well. As I have received a message asking me to telephone my wife at once, I suspect that this will be the shortest speech I have made in the House for some time, and I hope that the Minister will excuse me if he speaks soon after me and I do not hear his reply.
I very much agree with the hon. Member for Bodmin (Mr. Hicks) in his plea for the tourist boards in new Clause 1. There would be no English Tourist Board at all if there had not been a rebellion among hon. Members on his side and certain of us on this side which carried the day against the Government Front Bench at the time and was instrumental in bringing the English Tourist Board into being. If it be possible to secure acceptance of new Clause 1 today by a rebellion, I shall certainly join in it. It is well worth having the extra £20 million to finance the three boards, the Wales Tourist Board, the English Tourist Board and the Scottish Tourist Board, all of which have done excellent work since they were established—far better than any of us expected.
I agree with the hon. Gentleman in what he said, especially in the light of the end of the hotel development incentive scheme. There is a passage in the foreword to the Report of the Scottish Tourist Board for 1971–72, written by Sir Hector MacLennan, which says:
It would be the Board's wish to continue to help with refurbishing of small hotels when funds become available. We are aware that there will be a short-fall in medium priced accommodation, especially in the key tourist centres.


But they are short of money for the promotion of the smaller style of hotel which is so important in rural areas. I hope that the Government will accept if not the Clause at least the principle of trying to help tourism more than they have done so far.
Secondly, I realise that the Government have substantially changed their regional policy and regret what has happened in the past. This is particularly so in the spread of office jobs. I know that the Government are engaged in an internal exercise to try to shove out more Government jobs to the assisted areas. I hope that effort will be successful, and the Opposition must monitor that attempt. However, just as distressing is the picture of office jobs in private industry and the relaxation, since the Government came to power of the strict attitude to office development certificates, which has meant a considerable slow down in the number of office jobs going to assisted areas.
Thirdly, the shipbuilding industry, grateful though it is for the Bill, and the shipping industry, which is grateful for the conversations it has had with Ministers, are waiting today for an announcement of the Government's future attitude towards British shipping. I need not advance further the case put forward by my hon. Friend the Member for Swansea, West (Mr. Alan Williams), which is supported by others of my hon. Friends, but we are anxious today to have some answer about the need to build up the orders flowing from British shipping companies to British shipbuilding yards.
Today's Lloyd's Listshows quite clearly that, whatever hon. Members opposite may think in criticising the view of British shipping, people are holding back on orders in anticipation of a Government statement. Whether or not it is a good thing to have a statement, whether it is a good thing to help shipping is irrelevant to the simple fact that people are holding back. That is a view expressed not only by Lloyds but also officially by the Association of Shipbuilders and Repairers in its communication this month. Nothing could be clearer.
If the Minister of State cannot speak today about that matter, and cannot make a definitive statement, I plead with him to give us a date before the recess when

such a statement will be made. On that assurance, I should be willing not to vote for new Clause 7. However, it will have to be a definite assurance and I ask the Minister of State to respond accordingly.

Dame Irene Ward: Probably the House will be pleased to know that I want to discuss new Clause 7, which is concerned with shipbuilding and shipping. I thought that the hon. Member for Swansea, West (Mr. Alan Williams) made an interesting speech. Occasionally we get good ideas from the Opposition. The problem is that while they have so many ideas their economic policy does not provide the money to put all their good ideas into operation. I have confidence in my Government, although they do not always agree with me, that if one can persuade them to be reasonable then at least they are able to provide the money.
I agree with the hon. Member for Greenock (Dr. Dickson Mabon). Those of us who are interested in shipbuilding and shipping know that orders are being held back. I hope that none of my right hon. Friends on the Front Bench will disagree with the view of the House. Those hon. Members who represent areas which are linked with shipbuilding and shipping know only too well from those concerned in earning their livelihood in the industry, both management and men. that shipbuilders and ship owners are being held up. It is on that issue that I shall make my contribution.
I believe, although I am probably not always right, that Secretaries of State are very nice indeed. I like to get hold of Secretaries of State and I always try to be fair to them. I should probably like them a little more if they could make up their minds a little more quickly and get on with the job. Instead of raising Questions in the House or making statements. I have been very busy in other directions. I am really not competent to make statements but I consider that I am a good advocate for things which I think are right. Following the controversial issue about what would happen following the joint communication from shipping and shipbuilding interests, I immediately wrote to the Secretary of State. I shall read his reply, because, no matter who answers this debate, I do not think that


we shall get a better answer. All I can say is that it will probably be an unsatisfactory answer.
I wrote to the Secretary of State for Trade and Industry and received an answer yesterday—I think that was very nice of him. He must have known that I should let the House know the answer and he probably also knew that I should not be satisfied with it. The Secretary of State's letter of 27th July says:
Thank you for your letter of 17th July with the enclosed letter"—
it was no bother—
from the Chamber of Shipping about the new investment incentives scheme for shipping which has been submitted to me jointly by the Chamber and the SRNA.
I am afraid that I am still not in a position to announce a decision on the proposals put forward by the Chamber of Shipping and the SRNA. The position remains, as I said in the House in the course of Question Time on 17th July, that I hope to respond to the proposals shortly.
It is very much like a Secretary of State's reply—
But I can assure you that I am fully conscious of the need of all concerned to have an early decision"—
He does not define what he means by "early"—
and it is my firm intention that an announcement will not be unnecessarily delayed.
It is a very political answer—
I am writing both to the Chamber of Shipping and the SRNA to tell them this. As you can imagine, I am only too well aware of the fall-off in new orders for UK ownership in the last year, and this will certainly be one of the factors taken into account in reaching a decision.
There is really nothing more I can say at present and I can only ask you to be patient for a little while longer.
I think it was very nice of the Secretary of State to deliver himself into my hands. However, that reply does not suit me and it will not suit the Chamber of Shipping.

Mr. Frank McElhone: Resign.

Dame Irene Ward: It would not be any use the Government resigning because we would have to put up with you, and that would be jolly horrid.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. The hon. Lady must choose her words a little more carefully.

Dame Irene Ward: I do choose my words very carefully, but sometimes one must be human. That is what I try to be. That is a very disappointing reply and I hope therefore that whoever replies to the debate will give a more satisfactory answer.

12.30 p.m.

Can we have an undertaking that before the House rises for the recess we shall be given an answer? If it comes when the House is in recess the Secretary of State will be able, if it is an unsatisfactory reply, to avoid the expressions of opinion from myself and hon. Members who support me. I know it is a difficult matter but if the Government genuinely want to create employment and ensure that one of our biggest invisible earners of currency is supported up to the hilt, they should come to a favourable decision. It may be that the Treasury is the nigger in the woodpile. We do not know because as backbenchers we have to rely on the grapevine, on friendly relations and on heaven knows what, and it is difficult for us to discover what is happening. We need a favourable decision in the interests of the shipping and shipbuilding industries which are vitally important to this country. We are still the centre of world production in many instances.

I should hate to have to vote against my own Government today so I give the Minister fair warning. Nice though his letter to me was, if he thinks it will make me restrain myself he is living in a fool's paradise. The Secretary of State has already said that he is aware of the delays that exist because shipowners are waiting for his decision before placing orders. If he is aware of that perhaps he will get on with it and let us know what his conclusions are. The Chamber of Shipping have been very good in keeping us informed and I intend to fight in support of it. I hope, therefore, that someone will give us an answer this afternoon, or, at least, that we should be told if the decision will come before the recess. I shall not delay the House any longer but I could speak for 2½ hours.

Mr. Crouch: While I believe that the content of certain of the Amendments and of new Clause 6 and new Clause 7 is worthy of debate I do not think that they are appropriate to


the Bill and therefore I do not support them. To suggest with a Bill as comprehensive as this that after it is enacted the Secretary of State should immediately prepare a scheme to help the machine tool industry, and a scheme of assistance for the shipbuilding industry seems improper. It is wide-ranging and it is generous as it stands and I should have thought it was putting slightly the wrong construction on the Bill to add new Clauses 7 and 8.
For a long time I have held that we have a duty not to stand aside and leave industry to struggle on its own against world competition, an inadequate cash flow, increasing costs of raw materials and wages, and other economic problems. Everyone is involved in a mixed economy. We are very much involved in our shipbuilding industry and I support the Government in the steps they have taken so far and in the further steps they are considering of help for the industry. But the machine tool industry is perhaps the very cornerstone of British industry. It must not be allowed to fail. It must be sustained and allowed to grow, to develop and to modernise so that it is in the forefront of world competition.

Mr. Skeet: Why should we have yet another inquiry into the machine tool industry? We have had four or five over the last 10 years. Is my hon. Friend recommending another inquiry by the Government, or by anyone else?

Mr. Crouch: I am not recommending another inquiry or a specific provision in the Bill. But the Government are involved in the changes which have to take place in both private and public sectors of industry. The Bill is concerned with the private sector. I am concerned that the Government should play their part in helping the private sector to overcome its difficulties and at the moment the machine tool industry, like the shipbuilding industry, is facing a difficult period of change.
I wish now to turn to new Clause 1 which was so ably moved by my hon. Friend the Member for Bodmin (Mr. Hicks). I agree with everything he said about support being needed for the tourist industry. In North-East Kent we have a tourist industry which is in a state of decline. But it is not an

assisted area in any sense. If the new Clause is accepted, as I hope it will be, these small tourist areas, small pockets in a state of distress, cannot be left out. The Government cannot give assistance for tourism in the assisted areas without considering these other distressed areas.

Mr. Bruce-Gardyne: Does my hon. Friend deplore the fact that North-East Kent is not an assisted area?

Mr. Crouch: I have said before, in Standing Committee and in the Chamber, that North-East Kent should be regarded as an area requiring assistance. It has been so scheduled since the war, but it was removed from that category. Government policy is that North-East Kent should not be regarded as an assisted area to any degree, but they have shown some flexibility in assisting meeting the high unemployment rate which still exists there. After all, the unemployment rate in the constituency of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) during the winter reaches 9 or 10 per cent., a proportion which would normally justify almost immediate consideration for classification as an assisted area. I am not demanding that, but merely suggesting that if we agreed to new Clause 1—and the arguments for it were put strongly and were well received by the House—I should have to ask the Secretary of State to agree to consider similar assistance, for the tourist industry at least, in non-assisted areas.
I do not disagree with new Clause 4. The Bill does not place a specific emphasis on the need for assistance to service industries in the asssisted areas and the phrase "service industries" has a wider meaning than just the tourist industry, for it includes office employment in all its forms. It is an important factor and the Bill does not make a specific reference to it. My criticism of new Clause 6 and new Clause 7, of being specific about certain industries, does not apply here, because the service industries in a growing industrial society are much more labour-intensive than manufacturing industries as they are developed today.
In an aside, the hon. Member for Plymouth, Sutton (Dr. David Owen) said that he did not think that he could expect to get a petro-chemical complex in the South-West. Even if he did get it, it would not employ many people.


But if he got several office blocks housing several hundreds or thousands of people engaged on pensions or insurance administration, or even working in the administration centre of a direct mail order business, he would find that they were requiring labour on a large scale so that job opportunities would increase considerably.

Mr. Dick Douglas: I intend to be brief, even though my wife has not seen fit to send me an urgent telegram—following the example of the wife of my hon. Friend the Member for Greenock (Dr. Dickson Mabon). As did the hon. Lady the Member for Tynemouth (Dame Irene Ward), I wish to deal with new Clause 7. The position is becoming serious, as reports emanating from the Shipbuilders and Repairers National Association indicate. I quote from Lloyds List:
It is also known that some owners have refrained from placing contracts until there is a Government decision, expected soon…
I am grateful, as the whole House is, to the hon. Lady for having read the Secretary of State's letter into the record, but my worry is that vital orders are being held up for want of a decision with every day that passes.
It is not enough to rehabilitate the shipbuilding yards on the Upper Clyde unless the Government are prepared, with the ship owners and the shipbuilders, to devise schemes to get a flow of orders from United Kingdom owners going into United Kingdom yards.
It is significant that the first order received by Govan shipbuilders came not from a United Kingdom owner, but from Kuwait, although it would be breaching the rules of order to go into the details of that. We have pressed the Government time and again to consider how to devise a scheme to persuade United Kingdom owners to put their orders in United Kingdom yards. Perhaps it could be done by forms of credit or grants.
I know that there are difficulties because of international agreements and so on, but even the report from the Expenditure Committee yesterday shows that, although there is some measure of disagreement, if other nations are continuing to tie their owners to buying in their yards, it is vital for the United Kingdom

industry to have matching methods so that United Kingdom owners are tied to United Kingdom yards.
I hope that the Secretary of State will say that he has in mind some scheme agreed between the owners and the builders. It is appropriate for the Opposition to ask for such a scheme and I would wholeheartedly support new Clause 7. The sooner the Secretary of State can give a clear indication of what he has in mind, the better it will be for all employed in British shipbuilding and all who sail in British ships.

12.45 p.m.

Mr. Kenneth Warren: New Clause I identifies many of the problems and heart searchings that have confronted back benchers on my side of the House in terms of the Bill as a whole. Differentials in favour of an industry or a part of the country are given automatically at the expense of other industries or other parts. The tourist industry identifies the problem completely.
My hon. Friend the Member for Canterbury (Mr. Crouch) commented on that this morning. I have much sympathy with what my hon. Friend the Member for Bodmin (Mr. Hicks) is trying to do, but I could not take that sympathy into the Lobby in support of what he is proposing, because I cannot accept that there should be a differential in favour of holiday resorts in Scotland, or the South-West as opposed to North-East Kent, or my own area, Hastings. All of us right round the perimeter of the country and particularly in the tourist areas face exactly the same problems of changes in types of demand, of changes in volume of demand and changes in distribution of demand, and the problems of Blackpool or Bodmin are exactly the same as those of Hastings and other South Coast towns. I admit that we cannot offer the rather dangerous tours of mines that are available in Bodmin, but we can offer a certain battle site.
It is unfair to give subsidies to those areas when that must automatically be at the expense of other areas in exactly the same difficulty but not enjoying the privileges of the secondary effects that the Bill will promote. Investment in assisted areas by the Government will go, often directly but nearly always indirectly, into the tourist industry and the spin off for


the tourist and service industries in the assisted areas will simply not be available under the Bill for other parts of the country. I hope that my right hon. Friend will be able to tell us something about the already existing powers to help the tourist industry, because I believe them to be substantial and quite sufficient without new Clause 1.
I support what my hon. Friend the Member for Canterbury said about new Clause 6. Why select the two industries of machine tools and shipbuilding as opposed to other and even more vital industries which are in greater trouble, for instance, the ball bearing industry and certain other science-based industries? Discrimination does not assist in that respect.

Mr. John Pardoe: I was delighted to see that the Opposition had put down new Clause 4 because that indicates that in an emergency situation there is general acceptance of the importance of the service industries. At the time of the introduction of SET, some of us greatly regretted the attempt by the then Labour Government to discriminate against service industries and to try to prove that somehow employment in service industries was not as important as employment in manufacturing industries. In the debates at the time many of us, in the Conservative Party and in the Liberal Party, said that this discrimination was a nonsense, and I welcome the Labour Party to our view.
The hon. Member for Bodmin (Mr. Hicks) will probably agree that most of us from the South-West would prefer the area not to be over-dependent on tourism. We would prefer a much greater variety of employment. I do not like any area to be too dependent on tourism. In our climate it is inevitably a seasonal employment prospect in areas other than London.
We have the unfortunate situation in parts of Cornwall—almost the whole of the coastal areas—and in parts of North Devon, that for five months of the year we can offer employment, at ludicrously low wages, disgraceful wages in many cases, but that for the remaining seven months the only prospect available is the Supplementary Benefits Commission and, if people are lucky, unemployment pay for the first three years. For the foresee-

able future we see the need for a much greater increase in the jobs in tourism, and for that reason the Clause is to be welcomed.
Tourism unfortunately seems to be destined under all Governments to be plagued by mice disguised as lions. For example, only last week or the week before, the Treasury announced loans for hotel fire precautions, but when we looked further into this massive new help for the tourist industry we discovered that it was very much a mouse, very much a poor thing. Today we are dealing with what has certainly turned out to be another mouse, Sections 3 and 4 of the Development of Tourism Act When a Section has only £1 million behind it we are bound to ask whether it was really worth the bother, because £1 million cannot be spread as thinly as the tourist board is trying to spread it. It is having little effect in increasing tourist facilities in the development areas or anywhere else.

Mr. Ridley: Income from tourism is increasing fairly rapidly. We are now major earners of revenue from tourism. Will the hon. Gentleman explain why it is necessary to subsidise an expanding industry with large inputs of foreign tourists' money? Why cannot the tourist facilities be provided out of the income from the tourists who come here? Where are they going if they are not going to the hon. Gentleman's area? Why is it that they do not seem to want to go where he is, if he is not getting the money in Cornwall that he would expect to get?

Mr. Pardoe: Not all tourism is tourism by foreigners, nor is all valuable tourism tourism by foreigners. The industry which ensures that English people do not go abroad for their holidays is contributing just as much of a service to the community as the industry which attracts tourists here. We have all been happily going along with figures which for years have looked very good because they have shown a handsome balance on the tourist account, but the situation is changing rapidly. It will not be in balance very soon. We shall find next year, if not this year, that we need to attract far more tourist money into this country and that we need to provide much better facilities.
It is true, as the hon. Member for Bodmin said, that the far South-West is not part of the foreign tourist beat. It is unfortunate from our point of view, though perhaps not from London's point of view, that the great majority of tourists spend most of their time in London. They go to Stratford, but that is about as far as they go. We do not get a big share of the foreign tourists, certainly not a big enough share.
But the hon. Gentleman raised a valid point when he asked why the tourist industry needs the money. First, it needs it where it is basically seasonal, because there it has too short a period of the year to show a proper return on capital. That is very largely the reason for supporting it with Government money in the development areas, because they are inevitably those areas which must rely on seasonal tourism. It is no good suggesting that we should attract a massive weekend tourist industry for our hotels in the middle of January. I enjoy the North Cornwall coast in the middle of January but I would find it difficult to sell it. It is a long way for anyone to travel there for a weekend, and there is not a great deal of sunshine in January and February.
We need to create the jobs in the area, and in the foreseeable future we have no alternative to ensuring that we create them in the hotel industry, in the tourism industry.

Mr. Dan Jones: The hon. Gentleman referred to "the English people". May I ask him to amend that to "the British people"? I thought it was a slip of the tongue.

Mr. Pardoe: Of course. I am so used to drawing the distinction and putting the Redcoats on the Tamar, that perhaps it was a slip of the tongue, although it has certain nationalist associations behind it. Perhaps it was a Freudian slip. I apologise.
I regard new Clause 4 as being just as important to us in creating a complete economy in the development areas. In the dispersal and balance of the distribution of offices we have a pretty hopeless story to tell under all Governments in recent years. The report of the Location of Offices Bureau, published in June, does not show a very handsome return

for all its valuable publicity and great attempts. It is primarily concerned to move offices out of central London to outer London and the rest of the South-East. Very few of its activities are designed to move offices and office jobs to the development area. The whole policy needs a new shot in the arm.
We must consider what effect the present appalling increase in office jobs and office space in central London is having on London, first, in architectural and town planning terms; secondly, on the quality of life in the capital; and thirdly, on the rest of the nation, because it is not getting a satisfactory share of the office jobs. We need the new jobs in the regions far more desperately than London needs them. The residential population of central London is declining yet the jobs, particularly the office jobs, are increasing. This puts a strain on commuter train services to a point where the Government now have to subsidise those services. It is a crazy way to run a country. We should be able to distribute jobs more evenly to ensure that we do not have that appalling burden on the train services that bring the commuters into central London. The situation is also an absolute architectural and town planning disaster.
The Financial Times recently suggested that the best thing the Secretary of State for the Environment could do at his early morning meeting with his assistants that morning was to declare a total stop to all further office development in central London. More and more magnificent buildings are being torn down in London, all for the sake of the voracious demands of cars and office jobs. For the sake of London as a major city and architectural centre, the policy needs an entirely new shot in the arm.
The Government must start with their own offices. I hope that the Clause will at least serve to bring to their attention the pathetic nature of their attempts to decentralise their own offices. The Economist has suggested that we shift this place, the centre of Government, lock stock and barrel out of London. That is a very attractive proposal, though I am not appealing for it to be brought down to Dartmoor. I do not want it there. It should be north of a line from, say, the Wash to the Humber.

Mr. Bruce-Gardyne: The hon. Gentleman, like the hon. Member for Swansea, West (Mr. Alan Williams), draws attention in connection with these Clauses and Amendments to the need for dispersal of Government offices. I was bemused as I listened to the hon. Member for Swansea, West, and I am bemused as I listen to the hon. Gentleman, because I cannot see what the new Clauses, which suggest various extensions of the utilisation of the selective assistance provisions of Clause 7 of the Bill, can have to do with Government offices.

1.0 p.m.

Mr. Pardoe: This new Clause is aimed at increasing the dispersal of offices generally. It is not specifically designed to deal with Government offices and it might not in itself encourage any dispersal of Government offices. I am saying that the policy of dispersal needs a good shot in the arm, and this is no bad occasion to draw that to the attention of the Government. I hope that this Clause will do so.
The arguments put forward why businesses or Government Departments cannot move their offices are always the same—for example "There are no facilities", "It would be most uncomfortable for civil servants without lots of subsidised music and arts", "The roads and the aeroplanes are appalling" and all the rest. That is begging the question. I ask the Minister to imagine what would happen to the distribution of the Arts Council subsidies, to the new roads and new railways if his Department were to be moved to Camborne or Plymouth. Very soon all of those facilities would follow.
If we can get an effective policy of distribution and spread out these office jobs, they would bring in their wake new jobs and immense benefits to the regions. We need to develop complete communities in the regions. We do not want to be dependent on any one industry, on small manufacturing or on tourism. We want the other service jobs, we want the jobs that officers can bring. That is why I support new Clauses 4 and 1.

Mr. Bruce-Gardyne: As we are now discussing a substantial group of new Clauses I want to devote my remarks particularly to new Clauses 1, 4 and 6. To deal first with new Clause 4, I am

sorry that the right hon. Member for Bristol, South-East (Mr. Benn) having paid a very brief visit to the Chamber, is no longer with us, because I would have liked to hear him explaining his activities as a senior member of the previous Government and their treatment of the service industries in the development areas. I would have liked to know the reasons for the profound conversion that he has undergone, as demonstrated by new Clause 4.
I wonder whether the hon. Member for Swansea, West (Mr. Alan Williams) realises—listening to his opening remarks I can only assume that he does not—that the largest single job loss in Scotland under the Labour Government was in the service industries. We heard from the right hon. Member for Kilmarnock (Mr. Ross) and others that the reason for the loss of 85,000 male jobs in Scotland during their period of office was due to the excessively fast rundown of declining industries, such as mining, heavy engineering, shipbuilding and agriculture. It is a striking fact that the biggest single job loss was not in any of the declining industries but in the service industries, which in every other advanced industrial country were growing fast. The reason for this was the Herculean efforts which the party opposite undertook at the behest and guidance of Professors Balogh and Kaldor to discriminate in every possible way against the service industries.
Alas, many of these discriminations remain. No doubt we shall be discussing them later today. There is, for instance, the discrimination with regional employment premium. What I find a little bit of brass nerve is for the party opposite to tell the Government in new Clause 4 that they must use the selective assistance provisions of Clause 7 to encourage the proper distribution of employment in the service industries! After their performance during six years of office we are entitled to a rather better explanation, with perhaps even the overtones of an apology from the hon. Member.
In many parts of the development areas—I think particularly of the Highlands and Islands of Scotland—the service industries are far and away the largest employers. The loss to the Highlands and Islands from the discriminatory application of SET to the service


industries there was considerable. We are always grateful for the sinner who repents, but we might have had a little more acknowledgement of the extent of the sin and of the repentance.
New Clause 6 relates to the machine tool industry. My hon. Friend the Member for Hastings (Mr. Warren) doubted the wisdom of picking out special industries for particular mention under Clause 7. I confess that my anxieties about Clause 7 largely relate to the comprehensive nature of operations which my hon. and right hon. Friends can undertake under the aegis of the Clause. That too, is something that we shall be discussing later. What concerns me about the proposition in new Clause 6 is that we already have the example of a special scheme designed to assist the machine tool industry, and I am bound to say that it is not working very well.
We should pay some attention to what is happening with the present scheme which is taxpayer-financed to the extent of £16million and which is to provide machine tools for institutions coming within the scope of the central Government, whether they be universities, institutions of further education or Royal Ordnance factories. The remarkable thing is that with the universities and institutions of further education the average value of orders for machine tools placed under the scheme to date is running at substantially less than £3,000 per machine, according to a recent Parliamentary Answer.
As I have pointed out to my hon. Friends responsible for matters at the Scottish Office, machines at that sort of price are not much more than glorified "do-it-yourself" jigs. In so far as taxpayers' money is contributing to a scheme of this type, for the money to go on purchases of this kind must be largely a waste. In other words, if we are to have such a scheme the money made available by the Department of Trade and Industry on behalf of the taxpayer should be used for the purchase of more sophisticated machinery of genuine industrial application. To date we have seen precious little of that.
The operation of this scheme gives us little confidence that one such as that suggested in new Clause 6 could be expected to be put to good use. The

£16 million scheme which ends in September has not proved a good precedent. I suggest that if we are to take full advantage of this scheme it may be necessary for the terminal date to be rolled forward. Many institutions of further education and Royal Ordnance factories are not being over-speedy in coming forward with proposals for orders under the scheme. The average cost of machines purchased under the scheme may increase substantially, so that we shall have to see that it is being used for the purchase of good machines.
I should perhaps declare a constituency interest. Machines of the most highly sophisticated and modern type for genuine industrial application are produced in my constituency. They are not the sort of "do-it-yourself" carpentry kits on which expenditure seems to be made under the scheme. The working of the scheme does not give me much confidence that the acceptance of new Clause 6 would produce helpful results in the machine tool industry.
I wish to say a few words about new Clause 1—the tourist board and hotel industry Clause. I confess to my hon. Friend the Member for Bodmin (Mr. Hicks) that, alluring as I found his arguments, I do not entirely share his conclusions. I have forgotten the phrase that my hon. Friend the Member for Canterbury (Mr. Crouch) used, but he indicated that depressed tourist areas in need of special assistance would not like assistance under the new Clause to go to parts of the country where the tourist industry competed with them. This is one of the grave problems that we face in all schemes of regional differentiation. I have a feeling that in due course the area surrounding Piccadilly Circus will be, if not a development area, at least a land clearance area, because in the end we shall not be able to leave out anything.
I draw attention to another argument that militates against the new Clause so persuasively moved by my hon. Friend the Member for Bodmin, namely, the activities of a body that is already operating and is spending substantial sums in giving financial assistance to the tourist industry—the Highlands and Islands Development Board. I was told recently that up to 8th June, 1972, the board had provided assistance to the tune of £3·1 million for supporting the


hotel industry in the area that it covers. It is calculated that it produced a little over 1,000 jobs. I question the cost-effectiveness of this type of assistance.
An even more impressive figure was given recently. That is perhaps the sort of thing that one could expect to happen if we decided to give a Second Reading to new Clause 1.

Mr. Edward Taylor: Does my hon. Friend agree that in the reply to which he has just referred it was indicated that the assistance covered 102 hotel projects which, it was envisaged, would later provide substantial additional employment?

Mr. Bruce-Gardyne: All that the reply said was that the board had nine projects under consideration which could involve assistance of about £70,000.
I did not propose to leave this matter without drawing attention to one of the latest projects of the board—the presentation of a cheque for £128,750 to Sir Charles Forte in respect of one hotel. Bully for Sir Charles, and bully for his shareholders; I hope that they get a good return from their £128,750. But how many jobs will there be in the hotel—15, 20, 25? Not more. Furthermore, I imagine that the likelihood was that Sir Charles would have built the hotel anyway. I wonder whether the taxpayer can be said to be gaining value for money from the expenditures of this worthy board.
I have not all that much more confidence in the ability of the various tourist boards to spend the taxpayers' money more wisely than the Highlands and Islands Development Board has been doing in giving assistance to the tourist industry. Therefore, I shall not find it possible to go into the Lobby in support of new Clause 1.

1.15 p.m.

Mr. Raymond Fletcher: I speak mainly to new Clauses 4 and 7.
It is fairly plain from new Clause 4 that there has been some kind of semantic conversion on this side of the House. I vividly remember voting for the selective employment tax. My defence—and I intend to defend nobody else—is simply the traditional one that it seemed a good idea at the time. There I rest my case.
But I am glad to see that there has been a change of attitude. We on this side recognise that a service industry is an industry. Hon. Members opposite must appreciate that among our constituents, many of whom are manual workers in heavy industry, there is still a psychological resistance to the idea of transfer ring from, say, coal mining, to a service industry because a service industry is regarded as being, in some strange way, an emasculating industry. Consequently there is psychological resistance in the regions and areas which the new Clause is intended to help, and that must be taken into account in the public pronouncements of the Secretary of State and all the other Ministers concerned with making pronouncements about the Bill when it becomes an Act.
My second point is very minor and it may give rise to the usual hilarity which occurs when I get on to one of my favourite subjects. I narrow my remarks to one word in new Clause 7—"ships" It is not unknown to the House that I have an interest to declare in an old form of transport which is being revived. [An Hon. Member:"Hot air."] I have no connection with hot air inside or outside the Chamber. Hot air is strictly for amusement. I am concerned with the infant airship industry which is again coming into existence in this country and is already in existence in other countries. It may interest the House to know that the firm of West Deutsche Luftwerbung, in West Germany, has already started on the first stage of creating a 30-ton helium-filled airship. I have been approached by the Mitsubishi concern, which is not led by idiots, about the prospects of constructing airships in British shipyards.
That brings me to the word "ships". I do not want to raise the question too hardly, as it were, in such a way that it must be answered this afternoon, because I prefer the Minister to brood upon it rather than come back with a snap answer, which almost inevitably would be "No". Snap answers in politics are almost inevitably "No".
I ask the Minister to brood on this proposition. If the Shell Natural Gas Corporation—here I declare an interest in one of the companies associated with it—goes ahead with its £350 million project to transport natural gas to this


country by airships, there is only one place where those large ships can be constructed, and that, of course, is in British shipyards. I ask the Minister to bear in mind the possibility—I am choosing my words very carefully—that within the definition of "ships" he may have to include airships as well.
We are talking of the future, and no one can accurately foresee the future, though I do my best from time to time, but in so far as I can foresee the future it seems to me that there will not be very much difference between the construction of what I will call the Shell type airship and construction of the ship which will go to sea. I hope that this will be borne in mind when the Government accept new Clause 7, as I feel absolutely sure they will because it is such a sensible Clause.

Mr. Skeet: I would support the argument advanced by the hon. Member for Ilkeston (Mr. Raymond Fletcher) about airships, but I think that probably it would assist the dispatch of business if I confined myself to new Clause 6, in which hon. Members on the other side advance the idea that the Government should prepare a scheme to provide under Clause 8 of the Bill assistance for the machine tool industry. If I can I shall try to persuade the Secretary of State from going ahead with any such plan.
This matter was looked at exhaustively by a number of committees, one under Sir Richard Way who said:
If further progress is to be made to the extent which seems to us vitally necessary, it will be mainly by means of efforts made by the industry, not by actions of the Government—important though this can be in certain spheres.
The House will know that there has been quite a number of committees looking into the machine tool industry—Mitchell, Layton, Way and Fielden—and they have all taken place in the last 10 to 15 years.
What the industry wants is buoyancy in the economy, available markets and increased export trade, where it is already making a substantial contribution. Less fragmentation of production, with more specialised machine tools could help.
I suggest that the late Government, through the IRC, did have a look at several companies to encourage them to buy machine tools. British Leyland

Motor Corporation received some money for this purpose. Then there was investment in Herbert-Ingersoll which unfortunately was lost, and the reason for that way, and I quote the Financial Times:
The volume of business available in the United Kingdom has been consistently disappointing and the total workload has not been sufficient to enable the company to trade at a profit.
I think that this type of Government intervention I would certainly not recommend.
Several other cases have been looked at and Herbert-Ingersoll went into liquidation. Loans were also made to Marwin (Holdings), Plessey Numerical Controls and Kearney Trecker.
What I am arguing is that while the Minister may have great powers under Clause 8, largely because the criteria are so wide, in the public interests and the interest of the economy he should take heed of the advice which has been given by experience here and in other countries. For instance, in Sweden a company known as Statsföretag, a State holding company, in October, 1968, formed a State-owned machine tool company and took over one of the subsidiaries from Volvo and another two companies from the Wallenberg group. That was in 1968. The consequence of this according to the Economist of December, 1971, was that the nationalised tool industry was making enormous losses and it proceeded to sack 20 per cent. of the labour force.
In the light of what happened to Herbert-Ingersoll, a company which is packing up completely, because it found it had misjudged the market and was producing the wrong machines for the market to buy; and in the light of the other example in Sweden, where the State machine tool industry is struggling for its existence, I would ask whether we should accept the recommendation, of the Amalgamated Union of Engineering Workers, that the industry should be nationalised. That I believe to be quite irrational, and all that previous experience does not commend the recommendations in new Clause 6, that a further scheme should be prepared for the British machine tool industry to be analysed, diagnosed and modernised by the State.
If I may advise the House I would make this earnest recommendation. Those reports about the industry having been


made, the industry having already been analysed and investigated, it be left to the industry to put its own house in order. I would not suggest that any large tranche of money should be made available to this industry over and above what the Government have already provided.

Mr. Michael Cocks: Briefly to make a few remarks, I would say, with respect, that I thought that the hon. Member for Bodmin (Mr. Hicks) did not advance his arguments from those which he put forward in Committee. In the discussion in Committee two points came out particularly strongly. First of all, there was the question of seasonal unemployment, which is extremely serious. I do not see that the hon. Member has explained to the House today how his new Clause would specifically help solve this problem of seasonal unemployment.
Secondly, what guarantees have we that this money will not go to those people to whom we really would not like to see it go? I made this point in Committee, that development companies, which are already doing extremely well in this country, might be the beneficiaries of this sort of assistance. Indeed, in Bristol at the moment we have an unseemly squabble going on about who is to pay compensation in respect of the Avon Gorge Hotel project, and an unseemly scramble to get the work under way before a certain date expires.
I should like to feel that the assistance which goes to the South-West really goes to the provision of jobs and the provision of a stable basis of employment for the people who work in that area. I fully support the hon. Member's remarks about that, and if that point can be met this sort of assistance will be welcome.
However, I am surprised that those three apostles of private enterprise who have put their names to the new Clause have not put forward any justification for that minimum sum of £20 million a year to be specified for that work. I would think that the whole essence of such a scheme would be flexibility, and that there ought to be more flexibility in it.

Mr. Nicholas Edwards: I intervene very briefly to take up points made by the hon. Member for Bristol, South (Mr. Michael Cocks) and by my

hon. Friends the Members for South Angus (Mr. Bruce-Gardyne) and Cirencester and Tewkesbury (Mr. Ridley) criticising the new Clause. It seems to me that one of the most powerful reasons for the new Clause is precisely the seasonal nature of the tourist industry, because it is a fact that in areas where the tourist industry is seasonal it is exceedingly difficult to raise normal commercial finance for hotel projects and it is precisely in those areas that the main groups—on the whole, the main groups—donot come to develop hotels. Certainly the experience of the Welsh Tourist Board has shown that the stimulus for the right kind of investment comes locally and not from the major groups which have been referred to today, and that it is local investment which has helped to extend the tourist season and to reduce the high levels of unemployment in the winter months.
My hon. Friend the Member for South Angus referred to the fact that in the Highlands Government grants had produced a comparatively low return in terms of jobs. I quoted in Committee on 4th July some figures to show that in Wales the expenditure of a little over £3 million of Government money had stimulated investment of the order of £18 million and had created between 3,000 and 4,000new jobs. It has been the experience of the tourist board in Wales that the cost of creating these new jobs has not been the £3,000 to £3,500 per job indicated by my hon. Friend the Member for South Angus, but well under £1,000 a job. That is not a high cost for creating new jobs and reducing the level of seasonal unemployment.

1.30 p.m.

The hon. Member for Bristol, South referred to the level of expenditure suggested in new Clause 1. At the moment, with a figure of £1 million the Government have stimulated a large number of applications for thoroughly desirable projects. Eleven applications for such projects in my constituency alone have been put in:they are very desirable but cannot be proceeded with for lack of funds. The tourist board in Wales has applications which would involve Government expenditure of some £600,000 but which would produce investment of well over £4½ million is proceeded with.

We say that we must have an adequate sum and a continuing sum so that people can plan projects on a continuing scale, can asses them on merit and not have to rush forward with them to a deadline. There must be continuous planning for the future, so we want guarantees for substantial expenditure over a period of, say, five years.

The Government may say that this Bill is not the vehicle for our purpose, and we have heard certain reasons advanced in support of that view. We have had assurances from the Government, particularly on 11th July, that they are looking at the matter very carefully, and considering it with the tourist boards. I hope that my hon. Friend will be able to assure us that if he can not accept the Clause he will in other ways open to him give the tourist industry the guarantees and incentives which I believe it requires.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): This has been, through the selection list, about which I make no complaint, a very wide-ranging debate, and I shall do my best to answer all the various points that have been raised. But I first want to express my personal regret, and I am sure the regret of my hon. Friends, at the illness of the hon. Member for Barrow-in-Furness (Mr. Booth). We know what a valuable and active part he played in Committee, and we all wish him a very speedy return to good health.

Hon. Members: Hear, hear.

Mr. Grant: I will deal first with new Clause 1, moved very thoughtfully by my hon. Friend the Member for Bodmin (Mr. Hicks). I know the great interest he has in and the great knowledge he has of tourism. I have a great deal of sympathy with the reasons which have led him to introduce the new Clause and which have led some of the speeches on tourism. There is absolutely no difference between us about the potential value of the holiday industries to many areas where other forms of employment cannot easily be introduced. I am well aware of the importance of hotels and of leisure facilities in making an area more attractive to incoming industrialists.
Nor is there any particular disagreement between us on the way in which any

Government assistance should be administered. The wording of the Clause itself and the comments we have heard make it clear that my hon. Friend and other hon. Members regard the Development of Tourism Act, and the statutory bodies set up under it, as the right vehicle for dealing with the tourist industry. I assure the House, as I assured the Committee, that that Act contains adequate powers for the assistance of tourism, and that there is no reason to have recourse to further powers to be taken under the Bill.
But I realise that what really concerns my hon. Friends the Members for Bodmin and Pembroke (Mr. Nicholas Edwards) in particular is the amount of Government assistance to tourism in the assisted areas. I must remind the House that the total amount of assistance we are giving this year to tourism is likely to exceed the amount referred to in the Clause, and that next year's expenditure will probably be even higher. It is quite true that the lion's share will be in the form of grants to hotels under the incentive scheme, but the development areas will gain a substantial amount of benefit by way of hotel accommodation as a result. We estimate that under the hotels incentive scheme about £60 million will be spent on new hotels. It is therefore not right to suggest that the taxpayer is somehow being slack in his assistance for hotel building.
I know that my hon. Friends are looking beyond the time scale of the incentive scheme to developments which maybe needed in the future. It is too early yet to assess the full effect of this very considerable incentive scheme, although studies are now going on into future demands for and investment in hotels. A study is also being undertaken by the hotel and catering NEDC of the seasonal problem, and this may produce some very valuable and useful information.
I readily accept that there may be a continuing need for specific projects in specific areas both in the accommodation sector and in other sectors of tourism facilities to provide employment opportunities. That is why we have already provided some funds for assistance for selected tourist projects in development areas. I know that my hon. Friend the Member for Bodmin and other hon. Members think that the £1 million available under Section 3 of the Development


of Tourism Act is not adequate, though others may take a different view, but it is important to remember that for the development of an area's tourist potential it is not enough simply to create hotel or other facilities:more people have to be persuaded to visit the area.
In some areas the quickest way to get more tourist earnings is to encourage further use of existing under-used facilities. So we also give support under the Development of Tourism Act for the promotional and marketing work of the tourist boards, which is an extremely important part of the whole concept of tourism. The House should know that the grants given to the various tourist boards have been increasing each year. The boards had another increase this year. A great deal of the boards' marketing effort is designed to encourage people to visit the less known areas which, to some extent, include the development areas.
There must be scope for reconsideration of the assistance we give under the Development of Tourism Act for projects. As my right hon. Friend said in Committee, the Government are now considering with the tourist boards, which will be putting proposals to us, the scope for increases in the level of assistance to tourism. We have rightly delegated this problem to the tourist boards. When all the proposals are to hand we shall consider them in the light of all that has been said during our debates and having regard to the regional changes that have occurred as a result of the Bill and the boundary changes. I hope that on that basis my hon. Friend will feel that I am sympathetic to the theme behind the new Clause, though I would not wish to have it written into the Bill when there are already powers under the Development of Tourism Act.

Mr. Hicks: Will my hon. Friend say something about the time scale involved in these discussions between the Government and interested parties? Would he also comment briefly on the possibility of extending this to intermediate areas which have a tourist potential?

Mr. Grant: On the latter point, as I have indicated, this was one of the factors we took into consideration. But with the new assisted areas, we have a very considerable extension from the old

development areas. However, that factor will be taken into consideration in the discussions we are having. As to the timing, the grant of £1 million per anum given to tourists projects under Section 4 of the Act is a matter which is reviewed annually in the normal way under the Estimates procedure. I imagine that it will be some time in the autumn that we come round to the Estimates. I hope that we shall be able to consider it before the end of the year. I cannot go beyond what I have already said, that we are discussing the matter at present.
On the question of offices and services generally, I had some sympathy with my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), who, perhaps more in sorrow than in anger, drew attention to the slightly belated conversion of the Opposition to the concept of the advantages of the service industries. I welcome the contribution of the hon. Member for Ilkeston (Mr. Raymond Fletcher), who began with a very powerful mea culpa in this respect. He was so frank and honest in his view that it is only right that I should say that I will most certainly consider carefully his specific points about shipping. Nevertheless, we now are happily, if somewhat belatedly, all agreed that the service industries are a vital sector of our economy and that it is important for the development areas and assisted areas to have a proper balance between the service industries and manufacturing industries.

Mr. Alan Williams: The reason for the "conversion"—if that is the term the hon. Gentleman wishes to use—is demonstrated very easily in the north of England. Since the present Government came to office we find in the north of England five times the number of redundancies, a 30 per cent, increase in unemployment, 40,000 lost jobs, half the IDCs since 1969,a doubling in the number of manufacturing industries which have closed, and that vacancies are down and jobs in the pipeline are down.

Mr. Grant: I was expressing delight that the Opposition had been converted, but after that intervention I am not so sure. I still give the Opposition the benefit of the doubt and say that I am pleased that we are all agreed that the service industries form a vital part of our economy.
We must recognise that by and large the service industries locate where there is the economic and industrial activity which will give rise to a demand for their services. So in the main they are essentially local and not susceptible to being moved, or mobile, in the same way as manufacturing industry. However, a large number of offices, for example, are located not only in London and the South-East but also in other urban complexes which have, from a work aspect, no particular strong ties with the area in which they are at present located. They could carry out their function quite as effectively in one of the assisted areas. Indeed, because there is an element of the service industries which is susceptible to mobility, we have made it clear time and again that the provisions of Clause 7 will be available for assistance where they can contribute to that end.

1.45 p.m.

As to offices, the firms concerned could probably achieve very substantial savings in the form of lower rents and rates by moving out to the assisted areas from areas in which there is particular congestion. But the fact that firms accept this financial penalty is some indication of the magnitude of the difficulties which they foresee in making such a move. Therefore, any financial incentive to encourage a move would have to take that into account.

The Government are engaged in a consideration in depth of the whole question of offices and their removal. The sort of possibilities we are exploring are removal and settling in expenses, and not only all those connected with the removal costs of the firms concerned but also those of the staff, and possibly any special capital cost in adapting new premises to suit the firm concerned. We are looking into the question of assistance with rent, possibly in the form of a rent-free period or, perhaps, a longer period of financial assistance towards rent. There are great difficulties with this. An incentive of this sort would have to be very considerable indeed, and even then there is some doubt whether it would necessarily be effective. What is more, a specific grant for rent could have the effect of forcing up rent levels in parts of the development areas. We shall have to look at this matter carefully in

the light of general policy on this question; but it is a possibility.

The question of communications for some offices is of the utmost importance. There might be grounds for assistance towards the cost of maintaining these services. Whatever we finally decide, we shall need a very full publicity campaign to explain the advantages of our incentives and to encourage firms which can move to do so.

Having said that, I want to make it absolutely clear that we have the power to assist financially the relocation of offices from the congested areas to the development and assisted areas. Therefore, in that sense, the new Clause is unnecessary. To put in a new Clause specifically directed to one sector—the same considerations apply to machine tools and shipping—could cast doubts upon the generalities of the powers we intend to employ.

I turn to the machine tool industry. The Government recognise, as I am sure the whole House does, the difficulties that the machine tool industry has been in for a number of years. This is not confined solely to this country. The United States and the rest of Europe have suffered from the recession in the demand for their goods. This has been particularly difficult for our industry, which has suffered also from the general stagnation which started well before the present Government took office. The Government recognise however, the particular problems of the machine tool industry. In the long term what is needed most of all is an expansion of the economy generally and an increase in economic activity. The measures which have been taken by my right hon. Friend the Chancellor of the Exchequer are directed specifically to this end.

We recognise that the machine tool industry is one of the last industries to pick up resulting from expansionary economic measures. Therefore, on the recommendation of the little "Neddy" for the machine tool industry, we have brought in accelerated orders from Government sources, universities and further education institutions.

My hon. Friend the Member for South Angus was a little critical of this. I am sorry that the machine tool firm in his constituency has not benefited. The


purpose of the scheme was not to ensure that every machine tool had a full order book; it was to give the necessary boost and to bridge the gap until the measures announced in the Budget and in the White Paper on Industrial Development and also the provisions of the Bill took effect to stimulate orders from manufacturing industry generally. It was no more than a scheme which we were advised to introduce by the little "Neddy" for the machine tool industry to cover this period, and I believe that in this respect it has been helpful.

The Government having none the less recognised the problems of the machine tool industry, it is right of me to stress that we have the power under Clauses 7 and 8—

Mr. Bruce-Gardyne: Before my hon. Friend leaves the question of the scheme, may I put this to him? I am not sure that he has hoisted on board my precise point. I do not suggest that it follows automatically that every machine tool manufacturer should get a portion of this gravy boat. My point is that the evidence to date is that the average value of orders placed under this scheme has been absolutely minuscule—less than £3,000 a machine—and that the type of machine which can be purchased for that sum is little better than a do-it-yourself carpentry kit. I was hoping that my hon. Friend would be able to tell us that the Government would be using their influence to encourage this scheme to be used for the purchase of more sophisticated machines.

Mr. Grant: My hon. Friend was guilty of exaggeration in an effort to make his case. The Government are anxious that sophisticated machine tools should be taken up by the universities and agencies. It is an exaggeration to assert that the scheme is of no use. That is not what the industry has told the Government, nor is it what the little "Neddy" for the machine tool industry has said.
Following the recent exhibition, there is a great deal more confidence in the machine tool industry than sometimes appears from political speeches. I am pleased at the note of confidence which has been shown by those who are concerned with it, in particular by the General Manager of the Machine Tool

Trade Association who on 3rd July said this:
I am absolutely convinced…that it will not be long before order books start to look healthy once again.
That shows the measure of confidence that there is in the industry, though we all recognise its long-term problems. It is to assist in overcoming these that we are taking the powers under the Bill. I advise the House that the new Clause is strictly unnecessary.
I come, finally, to new Clause No. 7, which relates to shipping, which is of great interest to many hon. Members on both sides. The Chamber of Shipping jointly with the Shipbuilders and Repairers National Association have made proposals for incentives to stimulate orders for new ships. The question of what form of assistance, if any, might be made available to the shipping industry is under consideration by the Ministers.

Dame Irene Ward: Ha, ha!

Mr. Grant: If my hon. Friend will be a little more patient, I may have something to cheer her somewhat. The question of assistance to the shipping industry was raised in Committee. Government spokesmen informed the Committee that Ministers greatly welcomed the fact that both the Chamber of Shipping and the SRNA had been able to act in concert in examining possible solutions to the problems facing the industry. We welcomed this. The suggestions of these bodies are receiving close and urgent consideration. This important matter has a wide range of implications for the Government and for the economy as a whole, and it is only right that it should receive close and careful scrutiny.

Mr. Brace Millan: When were these proposals first received by the Government?

Mr. Grant: I cannot say exactly when that was, except that it was a relatively short time ago in view of the major importance of the subject matter.
My hon. Friend the Member for Tyne-mouth (Dame Irene Ward) quite rightly wanted to know, following her letter to my right hon. Friend and the assurance that there would not be any undue delay, when my right hon. Friend would reach a decision. My right hon. Friend will


give an answer before the House rises for the Summer Recess.
Generally on the question of shipping, the powers under Clauses 7 and 8 are, as in the case of those relating to other industries, adequate to provide any selective assistance which it may be decided should be available to the shipping industry.

Mr. Douglas: Is there any delay in giving this answer arising from the currency dislocation? Has the Minister discussed with other OECD countries the answer he is likely to give?

Mr. Grant: Nothing that I said should have indicated that there had been any unnecessary delay. I said that close and careful scrutiny was taking place. It would not be right in advance of any decision for me to pontificate on any of the points which are being raised in discussion.

Dr. Dickson Mabon: Can we have an assurance that, if the decision is made before the House rises for the recess, it will not be made in the form of an Answer to a Written Question but will be made in the form of a statement so that Members may question the Minister?

Mr. Grant: My right hon. Friend will undoubtedly note what the hon. Gentleman says.
The Government are very much in sympathy with the points which have been made in this debate, particularly the expressed desire to encourage tourism and to attract service industries to assisted areas and to help the machine-tool and shipping industries. However, as my hon. Friends the Members for Bedford (Mr. Skeet), Hastings (Mr. Warren) and Canterbury (Mr. Crouch) pointed out, it would not be suitable to spell out particular industries in a Bill of this nature, which essentially must be broad and flexible.
As it is essential in a Bill of this nature to consider the overall economic position and regional problems as a whole, although I am in sympathy with much of what has been said in the debate, I hope that it will not be thought necessary to press the Clause, otherwise I must advise the House to reject it.

2.0 p.m.

Mr. Millan: On all the new Clauses the Minister has been rather more forthcoming today than Ministers were in Committee, and for that we are grateful. On all these matters some apprehension was expressed in Committee. It has been useful to have these matters debated today. The Government have existing statutory powers in relation to tourism; therefore, in a sense the new Clause relating to tourism is not necessary. However, it was important to establish that the Government were taking a continuing, active and enthusiastic interest in helping tourism, particularly in assisted areas. The 1969 Act was not specifically directed to the assisted areas, and the powers under it apply everywhere.
I shall not go over what the Minister said today. We shall wish to consider it carefully. On both sides of the House there is a good deal of interest in seeing that the Government help the industry in a way that will provide additional employment in the assisted areas and additional amenities for our own holiday-makers and those who come from overseas. We shall watch carefully how the Government's policy develops in this respect, and no doubt there will be later opportunities to come back to it.
In connection with offices and service employment, we put down our new Clause 6 because the answer that we had in Committee on the selective assistance provisions of Clause 7 made some of us feel that the Government did not regard the problem with sufficient seriousness and were apparently not fully determined to tackle it.
One recognises that there are difficulties in having offices moved from areas which firms regard as attractive to them—for example, there is a certain magnetism in central London—but it is nevertheless true that even from the strict economic point of view of the office employers themselves it is an extremely expensive business to be in central London. I see no reason why we should not continue to operate a stringent office development control policy in central London. Such a policy has now largely been abandoned by the Government, but if it were maintained there would probably be quite a lot of office employment willing to move out of central London and the South-East generally, and in these


circumstances the sort of incentives that we have pressed on the Government would do an effective job.
The Minister has elaborated a good deal on what the Government have in mind—removal and settling-in expenses, new help with capital expenditure on office buildings, perhaps assistance with rents, rent-free periods, assistance with communications, and so on. Without wishing to be churlish, I have to tell him that if he had elaborated in Committee in that way we might not have felt it necessary to put down our new Clause on Report, because those were some of the matters that we very much hoped he would tell us about then. We are glad that he has told us now, and we shall watch the development of Government policy in the light of what he has said. We welcome his words, but we shall continue to pursue him on these matters in order to ensure that the Government put a proper policy into operation. Clause 7 will not be adequate without additional powers along the lines which we have proposed.
On the subject of machine tools, too, we have heard something more today, but it has not been anything like adequate to match the seriousness of the present state of affairs in the industry. The hon. Member for South Angus (Mr. Bruce-Gardyne) shows an enthusiasm for Government intervention in this sector that he does not show in others, I notice, but that is because he has a strong constituency interest. We welcome his interest none the less, and we hope to see similar enthusiasm expressed in support of problem industries in other parts of Scotland, though we have not seen it so far.
The Minister probably knows that there is a particularly serious situation in Johnstone, in Renfrewshire, with redundancies at Wickham Lang, a machine tool manufacturer there. My hon. Friend the Member for Renfrew, West (Mr. Buchan) would have been here today to emphasise the urgency of Government action, but being involved in that very problem in his constituency today he asked me to mention it. I assure the hon. Gentleman that the action that my hon. Friend has been taking will have the full support of his colleagues in the Scottish Parliamentary Labour Party.
We have made some progress on the subject of shipping, too. Hon. Members on both sides who have continued to press this matter on the Government will be grateful that we have been promised a decision before the House rises. We wait impatiently to know what that decision is. I shall not go over the various arguments which have been put—the Minister is well aware of them—save to say that there is a desperate need, for the shipbuilding industry's benefit to have the matter clarified and to provide incentives to British ship owners to put orders in British yards. I hope that when that statement comes it will match the urgency of the problem. I endorse what was said by my hon. Friend the Member for Greenock (Dr. Dickson Mabon), that the announcement must be made as a statement to the House and not sucked away in a Written Answer. Even supposing that it were an acceptable answer, that would not be right.

Dame Irene Ward: I am grateful for the hon. Gentleman's support, but I think that I can probably arrange the matter myself with Ministers. I have access, and I have done quite a lot behind the scenes. The hon. Gentleman need not worry about hole-and-corner methods. I can register my own point of view and have the matter settled.

Mr. Millan: We are grateful to the hon. Lady, but she is not the only Member with an interest in this matter.

Dame Irene Ward: No, of course not.

Mr. Millan: If, with her special nacilities for access to Ministers, she can arrange that the announcement will be made in an Oral Answer we shall be delighted, but one must make the point that several important statements—the Minister said that this was a major matter of policy—have been made by means of Written Answer, without notice to hon. Members, and it would be wrong if that were done in this case.
In view of the Minister's reply, we shall not press our various new Clauses to a Division.

Mr. Hicks: I agree that we have made progress in relation to the aims and intentions behind new Clause 1. When we originally submitted this proposal in the form of an Amendment in Committee


we did not get very far. Then, in the debate on Clause 7 as a whole, we made a measure of progress. Today, the Minister has made one or two quite firm statements, including the announcement that discussions are taking place between the Government and interested parties to examine the future requirements of the tourist industry as a whole, both in the context of hotel accommodation and in the context of assisting desirable projects.
If the outcome of those consultations points to the conclusion that more assistance is desirable for the tourist industry, I hope that my right hon. and hon. Friends will assist in the campaign with the appropriate Treasury Ministers.
In the circumstances, I beg to ask leave to withdraw the new Clause.

Motion and Clause, by leave, withdrawn.

New Clause 2

EUROPEAN COMMUNITIES ACT 1972

'For the avoidance of doubt, it is hereby declared that the provisions of this Act are not affected in any way by the provisions of the European Communities Act 1972'.—[Mr. Millan.]

Brought up, and read the First time.

Mr. Millan: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker: I suggest that it will be convenient to discuss at the same time new Clause 3 (European Economic Commission) and Amendment No. 42, in Clause 16, page 17, line 5, at end insert:
'(2) Any report prepared under the last foregoing subsection shall contain details of the way in which any of the provisions of this Act have been affected by the provisions of any treaty or international agreement entered into either before or after the passing of this Act'.

Mr. Millan: We should in any event have wished to pursue this matter at some stage in the Bill, but it became the more important to pursue after reports in the newspapers on 18th July that the German Government had raised with the Commission the British Government's proposals in relation both to free depreciation, which applies not just to the assisted areas but over the whole of the

United Kingdom, and to the capital grants system provided for in the Bill, and had told the Commission that they had doubts whether these arrangements met the obligations which Her Majesy's Government were accepting in acceding to the Treaty of Rome. Immediately the question is raised of how far we are able even now to determine our own regional policy and how far we shall be able to do that if and when we join the Common Market. The debate gives the Government an opportunity to clear up that matter.
Having read what most of what Ministers have said about regional policy since the question of accession to the Community first arose, it seems that there are two conflicting arguments. The first is that we shall have a common regional policy—we do not have one yet—and that it will be very much to Britain's advantage to have such a policy. The second argument is that we need not worry, that the provisions of the regional policy which we are operating now will operate under the Bill and that we cannot therefore be in any kind of danger from our entry into the Common Market.
Those two arguments cannot both be right. If we are to be in favour of a common regional policy and if we are to have such a policy, it follows, whether it is to our advantage or not, that we cannot say that the package of proposals which we are producing in the Bill is bound to survive exactly as it is at present and that no proposal to which hon. Members attach importance can possibly be in danger once we are a member of the European Community.
I am never sure about the logic of the common policy argument. The argument that a common policy can only be of advantage to the United Kingdom must presumably depend on what the common policy actually is. There is no logical connection between the proposition that we should have a common policy and the proposition that a common policy is bound to be a good thing for the United Kingdom. Whether it is a good thing will depend on the terms of the common policy. The Government hope that we shall get a common polcy which will be rather expensive and will involve spending large sums of money in the United Kingdom disproportionate to our contribution to the Common Market budget,


and that we shall get back thereby through our common regional policy rather more than we put in. The Government hope that that will compensate for the considerable burdens being placed on the British taxpayer and consumer in financing what is the regional policy of the French, the common agricultural policy.
If that all happens, I dare say those of us who are most critical about accession to the Common Market will be happy with it. However, it is by no means clear that it will happen. It is clear that the French Government will do their damnedest to see that it does not happen. There will be a tremendous amount of opposition. Yet we have Ministers continually producing anodyne replies that we need not worry about a regional policy, that it will be all right in Common Market and that we shall benefit from it. I do not believe that is true, and that is one of the reasons why we have put down new Cluse 3.
Some aspects of our regional policy will be in danger when we join the Community. There are persistent reports from Brussels that the regionl employment premium will be looked upon with considerable disfavour by the Commission and other members of the Community. It is significant that the regional employment premium is being phased out, according to the new terminology, from 1974. The Government have not committed themselves to its replacement by another form of labour subsidy. A good deal of this matter is concerned with whether we shall be able to continue with REP when we are a member of the Community.

2.15 p.m.

There is also the question of free depreciation, not just general aid to industry but specific regional aid following this year's Budget. The mere fact that Germany has already queried our free depreciation demonstrates that there is danger that this aspect of our policy will not be allowed in the Community and will not survive the adoption of a common policy.

It was reported in Monday's newspapers that the Commission has ordered the French Government to postpone their new regional aid measures. One of the reasons for that is that some of the measures which are now being proposed

by France might operate in areas or France where the Commission feels that there should be no regional assistance at all.

The relevance of that to the United Kingdom is that, because of the deteriorating unemployment situation, the Government have extended the boundaries and categories of assisted areas to an extent where we now have approximately 48 per cent. of the population of Great Britain covered in development, special development, intermediate and derelict land clearance areas. It must be open to considerable doubt whether, in any common regional policy in the Common Market, we shall be able to assist our industry to anything like the extent of 48 per cent. of the population of Great Britain.

We have a vital interest in the House in ensuring that we have a significant and effective regional policy. I have a particular interest in this matter as I represent a Scottish constituency. Apart from all the arguments about the efficiency and efficacy of particular types of regional aid and other matters, the fact remains that Scotland, if and when we join the Common Market, will be geographically off centre to a considerably greater extent than it now is. That will be a major disadvantage for Scotland. It is therefore vital for Scotland to know—this applies to other assisted areas as well, but Scotland will be further removed from the industrial centre of things—that the Government will maintain control over regional policy and will be able to apply effective regional aids.

New Clauses 2 and 3 are designed to assert what the Government themselves assert by implication or hint:the proposition that we shall be able to continue to have a regional policy appropriate to British regional circumstances. In case new Clause 2 is not accepted, new Clause 3 makes the point that there shall be no change in our regional policy without full discussion in Parliament. It is one of the unsatisfactory aspects of the situation that we can go through the laborious procedure of passing the Industry Bill, with Amendments, speeches and Government replies, satisfactory or unsatisfactory, but at the end of the day what we have provided may be changed by a decision of the Commission. We should be able to do nothing about it and we would not


be able to have parliamentary discussion about it.

The reason for new Clause 3—incidentally, new Clauses 2 and 3 are not alternatives; both are needed—is the necessity to make clear that there will be no change in this policy without adequate parliamentary discussion. Had time permitted I could have made many more points. I want, however, to impress upon the Minister that we take these new Clauses seriously and we expect a far clearer and more honest statement from him today than we have hitherto had from the Government.

Mr. Biffen: The hon. Member for Glasgow, Craigton (Mr. Millan) should be congratulated on the Clause because it gives the House an opportunity to examine an aspect of the Bill which received scant scrutiny in Standing Committee. I say that in no sense of disrespect for or criticism of those of my colleagues who served with me on the Committee. We were all under pressures of time and a general anxiety was felt, perhaps more by some than by others, that the Bill should reach the Statute Book. But as so often happens, and it is one of the delights of the procedures of this parliamentary institution, the situation which attends a Bill on Second Reading and even in Committee is transformed by parallel developments outside the House. Therefore we are wise, even on a Friday afternoon and to the inconvenience of the Executive, once again to turn to the problem.
First we have to consider the precise constitutional implications of what has been happening. I do not believe there is very much here of substance to concern the House but at least it would be agreeable to resolve some of the residual ambiguities. I am still puzzled about the nature of the consultation which took place between the Treasury Bench and the Commission in Brussels. When did it take place and what was the actual form of the consultation? On Second Reading the right hon. Member for Bristol, South-East (Mr. Benn) was very quick to alight upon this point and he intervened about it in the speech of my right hon. Friend the Secretary of State. Needless to say, my hon. Friend the Member for Banbury (Mr. Marten) was

also involved in the subsequent exchanges. My right hon. Friend said:
the White Paper on which the Bill is largely based has been subject of consultation with the Commission in Brussels."—[Official Report, 22nd May, 1972; Vol. 837, c. 1011.]
So we were left in absolutely no doubt that there had been consultation in Brussels.
In Committee, in the brief period during which we touched upon the subject in the context of whether labour subsidies might be written into the Bill, I wondered whether the fact that the Government had resisted an Amendment to include such subsidies could be related to the fact that after discussing the White Paper and after views had been made known about it the Government had decided against the writing in of such provisions. What intrigues me is that when the issue blew up again on 18th July my right hon. Friend the Minister for Industrial Development said that the Bill was shown to the Commission as soon as it was available. At no time hitherto had it been suggested that both the White Paper and the Bill had been shown to the Commission as soon as they were available.
There was a significance for the House in the difference between a White Paper and a published Bill. Therefore this is not a piece of nit-picking, but is a point of substance. If the Bill was shown to the Commission as soon as it was available, as was asserted by my right hon. Friend, I think it may be no more than an oversight that that information had not been disclosed on Second Reading, but at least it is something about which we could be given more information now.

Mr. Anthony Wedgwood Benn: Is the hon. Member aware that the German Ambassador in London has issued a Press release stating:
Within the framework of consultations agreed upon with Great Britain, British parliamentary Bills are provisionally examined by the Commission…
So that parallel and superior discussions are going on about Bills before the House is permitted to discuss them and in anticipation of that.

Mr. Biffen: That is an interesting and revealing intervention, and I hope that my hon. Friend the Minister will have a chance to elaborate on this when he


replies. I do not have any more than a suspicion about this but if we are to formulate happy relationships between our law-making institution and the law-making institution within the Community, it will be for the benefit of all if we understand the position from the outset. The debate may therefore be valuable even within this very narrow—or perhaps it is not so narrow—constitutional point. If the point made by the right hon. Member for Bristol, South-East had been elaborated on Second Reading, the proceedings would have gone somewhat differently
The Bill is not only concerned with regional development. It is also about generalised assistance to industry. A great deal of the discussions about Clause 8 related particularly to that. It is here that we have an interesting prospect of the degree of manoeuvrability, of sovereignty and of freedom of action invested in the Government. To what extent is that a freedom in industrial affairs which is conditional only on our proceeding through the transitional period of Community membership? To what extent is it a freedom to be traded in or shared—I shall not use emotive language such as "surrendered"—from 1st January onwards? I speak about this in terms of Clause 8 and as one who does not admire it.

Mr. Dan Jones: We have noticed that.

Mr. Biffen: Such powers of advocacy as I have at least are recognised by one hon. Member opposite, and I am grateful.
I shall not be assuaged by being told that everything is all right because the Commission will do my job for me. I did not come to the House to give up my critical rôle to the Commission. If I make a case against Clause 8, this is the place where I shall make it. This is where I wish either to be overwhelmed or, perhaps on occasions, to triumph. I am prepared to take my fortunes here. I am not convinced by my hon. Friends who ask why I complain if the Commission take a more critical view of the powers which can be exercised under Clause 8. Critical powers properly belong to this assembly.
I also have information which supplements to some extent that given by the hon. Member for Craigton when he referred to Monday's newspapers in deal-

ing with the relationship which seemed to be emerging between the Commission and the French Government. We have been without national newspapers for the last few days. I have been in Italy with the Select Committee on Nationalised Industries seeing, perhaps appropriately, how the Italians operate regional policy and how they have interesting organisations like IRI and ENI and a number of others—one could run through the whole gamut of initials once one starts and it is difficult to know where to stop. One of the by-products of that visit was that I was able to become a little more informed about what was going on in relations between the Commission and Italy than I would be with the help of the information provided by such newspapers as the Financial Times.
Perhaps the House will bear with me if I quote from the Daily American of 26th July.

Mr. Bruce-Gardyne: Not a reliable source.

2.30 p.m.

Mr. Biffen: My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) speaking from a sedentary position, says that it is not a reliable source. If he wants me to quote the Italian original from the Italian source, he knows perfectly well that to do so would not get past the Chair. I hope he will not disparage this as a source of information because what is about to be read into the record will be there for others to investigate and authenticate, and if I prove to be wrong I will naturally withdraw. The dateline is Brussels, 25th July, and it states:
The European Economic Community Commission has moved to prohibit Italy from continuing to accord financial aid to its entire textile industry, an EEC spokesman said today.
The Italian aid consists of a 5 per cent. reduction in the amount of social benefits that textile companies pay the state to cover their workers.

Mr. Deputy Speaker: The hon. Gentleman must try to relate his remarks on the EEC to the Industry Bill.

Mr. Biffen: I shall be most grateful, Mr. Deputy Speaker, if I am able to direct your attention to Clause 8. It provides for general assistance to whole industries, whether they are within or without assisted areas. Therefore, the


parallel of an entire industry which I am quoting—the Italian textile industry—could reasonably fall within the provisions of the Bill.
I hope you will understand, Mr. Deputy Speaker, that what I am seeking to demonstrate is that Clause 8 could provide for generalised industrial assistance and could, for example, enable the Government to offer a general system of help to the paper industry in its current difficulties, or to help the textile industry in its current difficulties, and that might be inadmissible. That is my interpretation. If that is not in the Government's mind and they can demonstrate that the Bill is worded as to make that wholly impossible, plainly they will seek the earliest opportunity to make that clear.
However, I do not want to prolong the proceedings and I will therefore conclude the quotation, because it is important. Most of the arguments being deployed about the Bill are understandably being deployed about regional policy. What I am saying is that the Bill goes beyond mere regional policy. Therefore, the generalised assistance which may be offered to industry also falls under the authority of the Commission.

Mr. Adam Butler: Would it not expedite matters if my hon. Friend confirmed his impression, which is my impression, that the form of aid which the Italian Government have been giving to the Italian textile industry—namely, reduction in contributions for insurance purposes—would not fall within the scope of the financial assistance to be given under Clause 7 or Clause 8? In that case, is not his example irrelevant to the argument?

Mr. Biffen: My hon. Friend will prolong my speech.

Mr. Butler: I was trying to shorten it.

Mr. Biffen: Perhaps, but that intervention does not shorten it. What we are discussing is not the form of aid, but in principle whether any of the forms of aid which might be provided under Clause 8 would be deemed by the Commission to infringe the principles of fair competition. I am therefore unimpressed by the fact that the labour subsidy which the Italian Government have been

practising and to which the Commission has taken exception is not referred to in the Bill. There are many other ways in which generalised assistance could be offered under the Bill which I am certain would cause eyebrows to be raised in Brussels if the Commission were determined to apply the principles of transparency of competition.
I complete the quotation:
The EEC move is in the form of a procedure it has opened under article 93 of the Treaty of Rome. The procedure provides that aid be suspended until comments from interested parties are compiled.…
However, the commission didn't believe aid should be given to the entire Italian textile industry, and therefore decided to open the procedure. In Biella, Italy, Giancarlo Forconi, director of the Industrial Union of Biella, bitterly attacked the decision of the European Community…
In a telephone interview, Forconi said:'The EEC inquiry will take a long time, and by the time it is over, the textile industry here will be dead.' 
All of us with experience of the concern and anxiety expressed from time to time by the textile industry—and I say this under the expert eye of my hon. Friend the Member for Cheadle (Mr. Normanton)—will recognise the feelings contained in those remarks. All I am saying, although it has been somewhat difficult to say it, is that we need clarification whether, under Clause 8, there is any likelihood that what is envisaged are forms of assistance which cannot be set aside by the intervention of the Commission.
One could continue this argument a good deal longer because I could move on to the considerations of regional policy itself and the philosophic dilemma mentioned by the hon. Member for Craigton. However, in the interest of brevity I shall not do so.
But I shall not be bounced into brevity because the Government are trying to scramble the Bill through on a Friday afternoon and I shall not be bounced into brevity because this subject happens to touch on the relationships of the Community affecting this sensitive issue. It does not involve whether one is in favour of Community membership or against it. But unless the House at a reasonable stage is persuaded and is confident about the relationships that will be evolved between itself as a law-making body and other law-making bodies, I promise my


right hon. Friends that the whole Community experiment will prove immensely sour.

Mr. Edmund Dell: The hon. Member for Oswestry (Mr. Biffen) is right to say that issues are raised here whatever one's attitude to entry into the European Community. However, some of those who have listened in the past few months to debates about entry into the European Community may have been surprised to hear that the European Commission was capable of bringing pressure to bear on the French Government, and that may even prove to be a reassurance to some hon. Members.
The reassurance that I should like is the reassurance about the future of the Bill in the context of membership of the European Communities for which my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) asked.
Both main parties in this country for a considerable time have thought it right that the United Kingdom should be a member of one European trading group or another. If it was not the European Economic Community it was the European Free Trade Area. My party was not opposed to membership of EFTA. We did not propose on coming into office in 1964 to renegotiate the Treaty of Stockholm. We thought that membership of EFTA was beneficial to this country.
However, European groupings of this kind take certain steps to achieve their objects. One common object of the two groupings was the promotion of competition. For that purpose there were provisions within the Treaty of Rome and the Treaty of Stockholm directed to harmonisation. I have no objection to harmonisation in principle, but an essential proviso, one to which the Government must have regard and to which all members of the European Community will have to have regard, is that harmonisation is not inconsistent with national full employment policies. There is a difference in this respect between EFTA and the EEC, because EFTA spoke only of competition. There was no element of social policy written into the Treaty of Stockholm, whereas an element of social policy is written into the Rome Treaty.
Regional concerns are matters of legitimate action by member Governments of

the EEC. This is perhaps something on which this country can build when we become members of the EEC. There is nothing inconsistent in there being both a common regional policy within the EEC and national regional policies within it as a supplement to them. That is true in agriculture, where there are both a common agricultural policy and national agricultural policies operating alongside. Even if there is an effective common regional policy, we shall need national regional policies as a supplement to it—indeed, perhaps as the continuing major part of the regional effort of the member countries. On that we must build, and on that perhaps the Bill is an attempt to build.
When the Bill was introduced apparently there were discussions with the Commission, and the German Government have made certain inquiries about it. But I can state with certainty that if the Bill had been introduced while this country was a member of EFTA there would have been an uproar, as compared with the murmurs from EEC countries. Every member of EFTA would have demanded that the Bill be withdrawn. They would have asserted that it was in every respect inconsistent with the Treaty of Stockholm. Whether we should have stood up to that uproar, is a different question.

Mr. Ridley: Does the right hon. Gentleman agree that standing up to the uproar means welshing on our international treaty obligations?

2.45 p.m.

Mr. Dell: Not necessarily. It depends on those obligations. One of the points I am making is that within such international agreements it is sometimes necessary to stand up to the uproar. For example, there was the uproar about investment grants, which the Bill re-introduces. If the Government were reintroducing investment grants within the EFTA context, there would be complaints, just as there were about the investment grant system introduced by the last Government. The last Government stood up to the clamour and maintained the investment grant system.
We did not stand up equally strongly in the matter of the aluminium smelters. We agreed to cut their initial capacity by a total of 40,000 tons, and agreed that


any expansion of that industry would be subject to a review within EFTA. We were prepared to make concessions for the purpose of maintaining relationships within EFTA. Under the Industrial Development (Ships) Act, 1969, EFTA shipyards were regarded as British shipyards for the purposes of the Act and for the balance of payments test which it made a condition of the investment grant for ships. There were complaints within EFTA about the activities of the Industrial Reorganisation Corporation.
The point I am making is that membership of international communities of the kind we are discussing involves a process of harmonisation, and issues may well be raised about the activities of national Governments in the pursuance of their regional and industrial policies. Those national Governments may decide in certain circumstances that it is right, for the purpose of the continuance of the Treaty and of obtaining the benefits under that Treaty, to agree to make certain concessions. By and large, I think the Labour Government were right. We stood by what we thought to be our rights under the Treaty of Stockholm, but we made concessions while standing up for the main principles with which we were concerned. I wish to have assurances from the Government that they will stand up for British interests within the EEC at least as strongly as the Labour Government did within EFTA when our actions were called in question by other member countries.
One specific point that has been raised several times during the course of these debates is the definition of the central area, the area within which there may be some control of the extent of investment incentives. We have been told, particularly by the Secretary of State for Trade and Industry, that that definition would be regarded as a matter of national interest. I have taken great comfort from that statement, because it means for my constituency and the development area in which it is situated that if there were any de-scheduling it would be a consequence of a decision of the British Government and not of any intervention by European institutions.
The main point is that within the process of harmonisation every national Government, and particularly the British Gov-

ernment, in which we are mainly interested, must take the position that full employment and national policies for promotion of full employment come before harmonisation. What is being asked for in the new Clauses is a statement by the British Government that that is their attitude, that they will put national policies for the promotion of full employment before harmonisation, if at any point the two prove to be in conflict. That is the sort of reassurance I, too, look for from the Government, and I hope that they will be able to give it today.

Mr. Ridley: The right hon. Member for Birkenhead (Mr. Dell) got the right distinction, up to a point, between EFTA and the EEC, but then seemed to get lost, because he assumed that it was fair to break the rules of the EFTA Treaty. Although that Treaty frankly says that free and fair competition shall be the rule between all members, it had no machinery for enforcing that provision despite the fact that it said that it was binding. The rule in the Treaty of Rome is the same, that there shall be fair competition, without differential subsidy, between countries, but the Commission has taken powers to enforce it.
That is why I have always believed that to join EFTA with a lighthearted assumption that we do not have to stick to the rules if we get into trouble was a slightly dishonourable way to look at that association, and that is why I have welcomed joining the EEC because it seems there are occasions when we might even need saving from ourselves.
I also believe that there is little point in paying lip service to competition and not being prepared to accept the disciplines which it will exercise if we may be tempted to err from the straight and narrow. That is why I think it is right that we should accept the implications of the EEC and be perfectly frank about them.
My hon. Friend the Member for Oswestry (Mr. Biffen), who always delights the House, certainly he delights me with his eloquence and brilliance, was in something of a dilemma, a dilemma out of which he got admirably but one could feel the two forces within his breast struggling. We know on the one hand of his dislike of Clause 8, and on the other of his dislike of the EEC. He got out


out of this dilemma with great skill and it was extremely brave of him to venture upon the topic at all. I congratulate him on what he said. He knows that on this side of the House there are doubts about how far along the road of Clause 8 we would like to go. It is difficult for him to attack the fact that the Commission will have powers to stop us going too far along that road when this is one of the few powers which the Commission will have which my hon. Friend would tend to welcome if it were in a different context.
I should have thought it was perfectly clear that the situation will be that any part of the regional or industrial policy of the Government will be subject to the approval of the Commission in so far as it does not contravene the rules of competition and subsidy which are laid down for the Common Market. I cannot see that this is an objectionable principle. If we are to have bidding-up all over Europe, if we pay X per cent. and the Belgians pay X plus 1 per cent., and the Italians X plus 3 per cent., then we have to come in again and pay X plus 4 per cent. That does not achieve anything in the regional policy context, it simply sets up a major distortion in the price at which the products in those industries are sold without giving anyone a competitive advantage. What is more, it escalates.
I should have thought that there was everything to be said for the Commission having power to stop this sort of thing, and I would unreservedly accept that this Measure could be over-ruled by the Commission if we go anywhere near to infringing the broad principles of competition laid down—with the savers for regional and social policy—which, as far as I can see, are being administered humanely and sensibly by the Commission in Brussels. I see no difficulty there.
Where I do see some difficulty is in this extraordinary distinction between capital subsidies and income subsidies. As has been said, the Italians have been prevented from paying an incomes subsidy by reducing the insurance contributions to be paid by workers in the textile industry. That is apparently taboo. If the Italians did the other thing and allowed their textile industry to run into heavy losses and if after a period of years the Government were to make a capital contribution to remove those

losses, that apparently would be totally acceptable.
It does not make very much sense to say that income or wage subsidies are not allowed but capital subsidies are. We saw this with the British Steel Corporation when it was apparently permissible for us to write off the accumulated debt of the Corporation although not permissible for us to subsidise it as it went along. In truth there is no real distinction between these two at the end of the day. I hope that the Commission will address itself to these problems.
What is slightly unfortunate is that the Bill should be rushed through before 1st January to make certain that it is on the Statute Book before the disciplines of the Common Market apply. It would be wiser to view this Bill as though we were already members of the EEC otherwise it creates a suspicion that there is something illegal—that is a word I would rather not use—something inconsistent with the Treaty of Rome about the Bill. I have no doubt that there is not. In my opinion it should come within the scope of the Commission because I do not see what the difference is between an incomes subsidy and a capital subsidy. It would be better not to hasten too fast with this Bill but to allow these points to be discussed carefully and objectively and to obtain a full view from the Commission about the acceptability of what is being done.
Even then I do not think it matters, because this Bill is permissive. It gives power to the Secretary of State to do certain things and if at a later stage it appears that these things cannot be done, all that we have to do is to refrain from doing them. That does not seem to throw up any real difficulties or inconsistencies. I do not think that these Clauses are sensible. The House has given a Third Reading to the EEC Bill, and it is made clear in that Bill that the powers of the Commission to override our own domestic ideas in an area such as this are clearly within the competence of the Treaty of Rome. I welcome that. It is right and proper that it should be so, but we should see an advantage in this and not say that just because we have been told not to do something, or we could be told not to do something, this is automatically wrong.
There could be the possibility, and I ask hon. Gentlemen who are opposed to joining the EEC to recognise this, that there are advantages in harmonisation of regional policies and subsidies and the promotion of fair and equal terms of competition. The proposal seems to be immensely worth while considering on its merits. If, for instance we could extend the principle to the world as a whole—we cannot I know, but if we could bring in the Japanese, the Koreans, the Americans and everyone else so that we all stuck to the same rules—think how much easier our problems would be over a whole range of products, imports and exports, where international competition has been thwarted by one country or another. Even to extend this to an area the size of Western Europe is a major gain which the House should delight in and welcome rather than treat with the suspicion evident in this debate.

Mr. Dan Jones: I do not intend to go over the arguments relating to our entry to the EEC because we do not have time for that this afternoon. I am sure the Government are perfectly correct in wanting the Bill passed as quickly as possible. I do not agree with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and I consider that he has been less than fair to his own Government by inferring that the haste to get the Bill is somehow or other because they want it on the Statute Book before we enter Europe. I do not accept that at all. I followed the progress of the Bill in Committee and I am in a position to judge very accurately the approach of the Minister and the Under-Secretary of State. I am sure that both of them and the rest of the Government are sincere in wishing to get the Bill on the Statute Book for the simple and sound reason that the regions desperately need the help inherent in it.

3.0 p.m.

New Clause 2 is very simple and straightforward and the Minister could have short-circuited the debate by saying "I accept it." [Laughter.] Hon. Members on the Government side laugh, but I shall prove my point in a moment. The new Clause simply says:
For the avoidance of doubt, it is hereby declared that the provisions of this Act are not affected in any way by the provisions of the European Communities Act 1972.

In Committee it was the Opposition who saw Clause 8 through its various stages. Hon. Members opposite were opposed to it. I am sure that before this debate ends we shall hear more of that opposition. The hon. Member for Oswestry (Mr. Biffen) has been refreshingly candid in his opposition to certain provisions in Clause 8. I cannot understand why the Minister should wish to defeat his hon. Friends on an issue of this kind and not ensure that the EEC does not frustrate the objects of Clause 8.

There is absolute and incontestable proof that since the formation of the EEC the regions have fared rather badly. There is also proof that the Commission in Brussels has interfered with the development of the regions in the EEC. If the Government are not aware of that, they are behaving not only naïvely but dangerously. The regions in this country expect reasonably substantial assistance from the Bill. If the regions, which have fastened their hopes to the Bill, are cheated in 1973 as a result of any form of interference by or check procedures from the EEC, the disappointment, chagrin and genuine indignation of the regions will be great and their reactions will be perfectly justified.

I have expressed the point briefly and bluntly, which is the only way I know how to speak. People may disagree with me but they know where I stand. I ask the Minister to intercede in this debate and to tell us, if the Government are sincere in what they say about giving advantage to the regions, that he will accept this very simple new Clause so that we may have faith that they mean what they have said.

Mr. Warren: There has been a remarkable escape from reality about the way in which the EEC functions. There seems to be an ability to avoid the reality of what goes on and to concentrate on theory. My hon. Friend the Member for Oswestry (Mr. Biffen) has been inclined to fall into this trench.
I agree that the Bill goes beyond the question of regional policy; there is no doubt about that. I have to take my agreement with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) a bit further and say that I do not think it was ever out of the mind of any hon. Member in Committee that we were dealing with a Bill which had


to be considered in the context of what the EEC said and did. I agree with the hon. Member for Burnley (Mr. Dan Jones) that this matter is urgent. We cannot wait until 1st January because something needs to be done now. That supersedes many political dogmas which some hon. Members, particularly on this side of the House, have been nurturing for many years. The reality of what goes on in the Common Market has not been accurately postulated today.
The types of aid given by countries in the Common Market were considered by the Select Committee on Science and Technology when it was discussing the problems of the British computer industry. The Committee said in paragraph 245 of its Fourth Report:
Despite the provisions of the Treaty of Rome, the French and German Governments have in recent years been supporting their domestically owned industry…".
It was estimated that in 1971 the assistance for the French industry was over £16 million and for the German industry over £34 million. This aid is being given at a time when it is believed that there is harmonisation to the disadvantage of particular industries and areas. There have not been complaints by any countries in the Common Market to the Commission or by the Commission to any Common Market country, notably West Germany and France, about this kind of aid.
If I may voice one criticism to my right hon. Friend the Secretary of State for Trade and Industry, it is nine months since that report was made. That is a suitably human period of gestation, and I hope that my right hon. Friend will make a statement similar to that which he promised to my hon. Friend the Member for Tynemouth (Dame Irene Ward) about the shipbuilding industry before the Summer Recess.
The Common Market Commission must live with the reality of regional development. Nobody can look at the common agricultural policy without realising it is a form of regional aid. That reality has been expressed today by the hon. Member for Glasgow, Craigton (Mr. Millan). I hope that the Government will not fail to reject the West German complaint to the Commission. The type of complaint made is spurious, but I draw attention to the Osbert Lancaster cartoon in this

morning's Daily Express which shows that the types of complaint we should make are not exactly those which were earlier put forward by the right hon. Member for Bristol, South-East (Mr. Benn). The cartoon says:
Don't forget, dear, the situation is never so bad that a few well-chosen words from Mr. Anthony Concorde-Benn can't make it ten times worse".
Throughout our consideration of the European Communities Bill in the House, nothing inhibited us from making protests or saying that we would wish to change Common Market policy either before we went into the Common Market or after we joined.

Mr. McElhone: It is only fair that the hon. Gentleman should repeat what he said a moment or two ago now that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) has come into the Chamber.

Mr. Warren: I am not sure whether Mr. Speaker will allow me to read it again, but if it is the wish of hon. Members opposite perhaps I can do so. I quoted the Osbert Lancaster cartoon in today's Daily Express which, in commenting about the right hon. Member for Bristol, South-East, said:
Don't forget, dear, the situation is never so bad that a few well-chosen words from Mr. Anthony Concorde-Benn can't make it ten times worse.
Does that satisfy the hon. Member? I am grateful to you, Mr. Speaker, for allowing me to repeat that. Any other encores will be gladly supplied, but I think I must press on.
Article 93 of the Treaty of Rome has been referred to, but there is also Article 92 which makes it quite clear that the Commission shall, in co-operation with member States, keep under constant review all systems of aid existing in those States. Furthermore, it says that it shall be compatible with the Common Market to give aid to promote economic development areas where the standard of living is abnormally low or where there is serious under-employment.
In conclusion I would like to pass one comment on our relationship with the Community. I hope that my right hon. Friend the Secretary of State and his fellow members of the Government will make sure that all Ministers and officials


who go to Brussels will actively battle on behalf of this country. I hope that, even if they come out with compromises, those compromises will adequately reflect the needs of Britain. There is nothing in the treaty to prohibit that. If we fail to have that assurance in our minds when we go away from this place today we shall have missed a very important element laid down in the Bill.

Mr. John Mendelson: What the hon. Member for Hastings (Mr. Warren) ought to have confessed when he referred to the Daily Expressis that a great many of us share a secret desire to be the subject of a cartoon by Mr. Osbert Lancaster. Very few have achieved it, but the Secretary of State has achieved it, and so has my right hon. Friend. The hon. Member for Hastings will never achieve such fame. The contribution we have heard from him today, that small lecturette, will make quite sure that he will never share the fame of his right hon. Friend and my right hon. Friend.
I am not so sure about the hon. Gentleman and the Member for Cirencester and Tewkesbury (Mr. Ridley). I think he is of a different frame and might well achieve this kind of fame.

Mr. Speaker: Order. This really is not the topic of this debate.

Mr. Benn: Could the cartoon be circulated in the Official Report?

Mr. Mendelson: You will know, Mr. Speaker, that I hardly ever ask your permission to indulge in any such references at all, but just a minute or two ago we had imposed on us about four minutes of this tripe and I thought that I might take 90 seconds to make a reference to it in passing, and that was all I was doing.
From the drastic logic of the hon. Member for Cirencester and Tewkesbury. probably the most drastic since Thomas Hobbes, I can see how he frightened his colleagues from time to time in the last few years, and how they must have been frightened when listening to him about his determination that the people of this country, in areas where unemployment is high, must be disregarded or put on the altar of competition, as he has explained again to the House this after-

noon. It is indeed true that there were some from whom we had to be saved, and I am very glad that we have been saved from them. There are some others who are the same kind, but we thought that the Secretary of State had learned some of the lessons of the régime of the hon. Gentleman the Member for Cirencester and Tewkesbury and of his right hon. Friend who is now the Minister of Posts and Telecomunications, and that, abhorrent as we found it, and frightened of it as we were, we did not want the reintroduction of this same rigid policy in relation to the European Economic Community. Because this is what is at stake in this debate. It is indeed a serious subject, not to be treated with witticism or frivolity.
I would point out to my right hon. Friend the Member for Birkenhead (Mr. Dell), to whose speech I listened with the profoundest of interest, that although his case was quite consistent there was one difference he perhaps ought to have pointed out to us between EFTA and the European Economic Community, and that is that nobody can deny that the United Kingdom had in EFTA a position different in size and in importance compared with that of most of the other members and a position different from what we shall have in this Economic Community of the Six plus four. It is that distinction of size and influence and power that is the reality.

3.15 p.m.

Mr. Dell: My hon. Friend may find when he studies, as I am sure he will, the history of EFTA that the advantage or disadvantage was shown by the concessions we have had from time to time to make.

Mr. Mendelson: We made those concessions because we valued the association and because of the purposes of the association, but we are not in a position to coerce the Community to make them. That is the reality of the situation, and anybody who has listened to the arguments of the Conservative Government until 1964 and of the two Governments since then up to 1970 will know that that is correct, will know that is true.
There is a big difference in belonging to a community where one can say sometimes, "We do want to amend certain policies, there are certain policies we


wish to pursue, because we think the general purposes are in the interests of us all, and we, as the biggest Power in the association, make a deliberate concession". There is a big difference between that and entering a Community where the lines are so drawn that it will be to our essential disadvantage if this policy is continued a ľ outrance, which is suggested to be right.

Mr. Bruce-Gardyne: If the hon. Member says we are in a position to coerce the EFTA arrangements I suggest to him that he should have in mind that his hon. and learned Friend the Member for Lincoln (Mr. Taverne) had to get up in this House and explain that a specific undertaking given to ICI publicly that purchase tax would be eliminated on a particular product of ICI, a product produced in the Scottish development area, could not be honoured because of our EFTA partners, and we were forced to accept that.

Mr. Mendelson: I am saying that, given the power and size of all the partners in EFTA, it would not be true to say that there was that kind of coercion to which we are going to be subject in EEC, and it cannot at all be compared with our situation in EEC. The argument when a Government decide not to do something, or to amend something it was proposed to do, must be as my hon. and learned Friend the Member for Lincoln (Mr. Taverne) put it. That argument is a genuine one, but nobody could deny the proposition which I am advancing, that we are entering a community wholly different from the association, with larger purposes and different aims, not at all to be compared with EFTA.
As the hon. Member for Cirencester and Tewkesbury said, the association we are now about to enter has got powers which it has taken unto itself, powers of enforcement, and I completely agree with the hon. Gentleman that that makes a real difference. That was the point I was advancing against the argument put forward by my right hon. Friend.

Mr. Ridley: I want only to remind the hon. Gentleman that the EFTA Treaty was quite specific and binding and that the only deviation or coercion could be by breaking our word. Is he really saying that it is better to join a

community in which we can break our word and welch on our undertakings? Is that why he favours the EFTA Treaty?

Mr. Mendelson: Not at all. I am saying the opposite. I do not know whether the hon. Member often attended the long Committee consideration of the European Communities Bill, but if he did he will have heard his right hon. and learned Friend the Chancellor of the Duchy of Lancaster always saying, what the Government have often said, "Once we are inside the Community we will deal with that". He was joined by my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). My right hon. Friend the Member for Cheetham said exactly the same thing. He said. "There is nothing to worry about; once we are inside we shall see that things which are not possible we shall not have to do". My argument is the exact opposite. I support the new Clause because I want the Government to be clear open and frank about their attitude.
Here I come to the new Minister for Industry, who made such light work the other day of the Private Notice Question he had on the intervention by the German Government. During that very short period of question and answer he spoke of the position of the steel industry, which is why I am now intervening. The steel industry is a very decisive case in point for our future. The hon. Member for Cirencester and Tewkesbury said that there is no real distinction between writing off capital losses and making immediate current direct subsidies and in logic there may not be, but our debate is directly relevant to the steel industry under the British Steel Corporation.
We know that at the suggestion of the Secretary of State for Trade and Industry the board of BSC is at the moment preparing its development programme. We know that there will be arguments and discussions between Lord Melchett and his board and the Government. But far more important than any instances so far quoted is the future policy of the Government for the expansion of the steel industry. There may well have to be very considerable Government assistance for that industry in future. I do not know whether everyone on that side of the House supports that view, but we on this side are certainly in favour


of seeing to it that there is no danger whatsoever of such assistance not being given.
I come from an area where the distinction between giving support to a particularly handicapped region and giving more general assistance is of the greatest possible importance. I do not regard this debate as dealing merely with high unemployment regions. There are those of us who come from constituencies where until a few years ago the level of unemployment was comparatively low. Unfortunately that is no longer true of South Yorkshire. We have with the utmost consistency pressed for special assistance for the regions, and have thought it our duty so to do. But one result has been a certain distortion of economic development. A result of giving special aid to the regions was that a number of firms which might have come to Yorkshire have bypassed us and have gone to development areas. We thought that we were right to press for special assistance for the regions, but there comes a point when as a result there is a lack of new investment in areas where unemployment until a few years ago has not been so high.
Therefore, if the Government have recently extended a certain amount of special aid to South Yorkshire, to the whole Yorkshire coalfield, we welcome it, but what is important is to recognise that further aid right across the country will be needed, and will have to pick out certain industries. We want to be sure that when such assistance is given under the Bill neither the German Government nor the Commission nor any other EEC Government will have the right to interfere with such policies if the British Government wish to pursue them.
Some hon. Members opposite have always been hostile to the kind of policies of economic assistance and of a certain amount of economic direction pursued by the previous Government, so why are they not honest about it? We know that many Government back benchers are deeply critical of the policies now being pursued by the Secretary of State for Trade and Industry. We know that there has been a great deal of criticism behind the scenes because he is now pursuing interventionalist policies, so their views

are not relevant to this part of the argument. They are opposed to this kind of interventionalist economic policy in any case on doctrinaire and other grounds, and they are none the worse forthat—they are entitled to their views. We on this side have always regarded theirs as a mistaken, misguided and highly danger-our policy.
After two critical years in which we have seen the results of this disastrous policy of allowing the lame ducks to look after themselves and making competition king, after two years of bitter experience, we have seen a change. The change has been brought about not so much by what has happened in Parliament but by the people. It has been brought about by what Ministers have heard when travelling throughout the United Kingdom from local authorities, local industrialists and local trade unionists, who have drawn attention to the results of their policies. After two years we have just managed to persuade the Government to introduce certain changes in their policies, but now we hear that people outside, in the countries which make up the EEC, are beginning to criticise the legislation necessitated by the change. This is the real position, and it is no laughing matter.
We want to hear from the Minister for Industry a little more than we heard the other day when he replied to the Private Notice Question. We want to know whether the criticism was as limited as he then suggested. He made one believe that all that had happened was that someone had mentioned that there might be something wrong with the Finance Bill or with certain provisions of this Bill; that this suggestion had been answered; that there was nothing really to worry about, and that we were not really involved. We want today a much more detailed and careful account of this business.
Even more important, we want to hear about the Government's future attitude. This is not a matter of not looking after the Community. The Government are not selling their particular policy on entering the Community on the basis of the airy-fairy contribution of the hon. Member for Hastings. Senior Ministers have said that they want us to be in the Community because it will be in the direct economic interest of our people. That is their argument; not just a question of


joining because it would be nice to join—

Mr. Warren: If the hon. Gentleman thinks that mine was an airy-fairy contribution, will he not recall that I quoted Articles 92 and 93 of the Treaty of Rome as being the reality of how negotiations take place?

Mr. Mendelson: The hon. Member gave us the old story about not looking at the theory but at the practice of what happens in the Community. That is precisely why his contribution was airy-fairy. He argues, as the Chancellor of the Duchy of Lancaster has argued for months, that all these provisions we are worried about just do not exist, but the fact is that this country, joining the Community at this stage, with our own distribution between agriculture and industry and with our own contributions to the Budget of the Community, will be put at a disastrous disadvantage. We cannot discuss the Community in theory. We cannot say that competition is king. We have to look at the kind of provisions that are being made.
The hon. Member mentioned the common agricultural policy. That policy is designed to do certain things for French agriculture and for a small section of the farmers in Bavaria. It is nonsense to say that the Community as set up on general legal grounds; that what was wanted was a good legal framework. It was not done in that way at all. Anyone who followed the legal negotiations, which took four and a half years before the EEC was ever set up, knows that the original six Member States took great care two adjust each other's economic interests; and that some States, like France, being more powerful than others, got into a position of certain advantage.
Therefore, we are only exercising the normal right that any of those countries, the original partners, would have claimed, to say that we must look after our special interests as they are now. The Government should hold up the negotiations and see whether, at the summit conference in October, these interests cannot be better safeguarded. They should at least give the House and the country an assurance that they will see to it that nothing that might be done in the Community will interfere with the provisions proposed in this legislation. I cannot see how any hon. Member—such as the hon. Member

for Hastings—who wants these interests safeguarded can do anything but go into the Lobby in support of the new Clause.
We want answers to the questions asked in the debate. We want to know the reason why the Government will not accept the new Clause. I see no reason for that. The Government ought to accept it and thereby give some confidence to the House and to the country.

3.30 p.m.

Mr. Bruce-Gardyne: No one can match members of the international Socialist brotherhood in producing a good burst of xenophobia from time to time. To listen to one like the right hon. Member for Bristol, South-East (Mr. Benn) on the subject of the inquiry from the German Government to the Commission the other day about some of the provisions of the Measure we are discussing, one would imagine that we were fully entitled and able to conduct our domestic affairs as if the world outside our borders simply did not exist.
I happen to agree entirely with the right hon. Member for Birkenhead (Mr. Dell) about the restrictions that were inevitably imposed upon us by our membership of the European Free Trade Area. But when my hon. Friend the Member for Oswestry (Mr. Biffen) referred to the possibility of the European Commission raising an eyebrow about some of the proposed arrangements in the Bill, I recalled our experience not in EFTA or the European Community but when we used to have those regular quarterly meetings and visitations from Mr. Richard Good of the International Monetary Fund. He used to raise an eyebrow quite frequently. We used to see the Labour Party slip out of one commitment after another as the eyebrow went up and down. It is totally unrealistic to imagine that we in this House can conduct our affairs as if our international relationships did not exist. That is why I agree with my hon. Friend the Member for Hastings (Mr. Warren) that so much of what we have heard this afternoon from some of the opponents of the European Community is somewhat lacking in realism.
My hon. Friend the Member for Oswestry said that he did not like Clause 8. I confess that I am not overwhelmingly enamoured of it myself. However, my hon. Friend, in his crucial point, said


"I believe that criticisms which one may have of this Measure should be argued out in the House and I do not wish to have the restrictions imposed by the Commission in Brussels".
I have a good deal of sympathy with the attitude of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). Sometimes it is perhaps no bad thing that we are saved from ourselves by a certain amount of outside influence. But my hon. Friend the Member for Oswestry is a very powerful advocate of the causes he sustains, and we all admire his advocacy. However, the truth is that successive British Governments of different complexions have, under the aegis and pressure of Whitehall civil servants, pursued policies in this respect, such as those we are discussing, that neither he nor I find particularly compatible. I have not noticed that my hon. Friend's advocacy, powerful as it is, has prevented this from happening. I do not find it particularly easy to share my hon. Friend's convolutions about his attitude towards Clause 8 and the possible intervention of the Commission upon it.
I should like briefly to emphasise where it seems only logical that regional policies should be desirably considered in a wider context than the purely national context. Not long ago I was approached by the controlling firm of a factory in my constituency. The firm was deeply worried about the proposals for the provision of a large new IRC-type fund in Northern Ireland because it was afraid that assistance might be given by this fund to a manufacturer in Northern Ireland who was in competition with a subsidiary of the firm in my constituency.
This particular manufacturing firm in Northern Ireland had almost bankrupted itself—it had been trading at a loss for some time—by under-cutting the market for a particular product which was also produced in my constituency. The parent firm of the firm in my constituency said "If this body in Northern Ireland is to inject cash into the business in Northern Ireland so as to enable it to continue under-pricing the market at the expense of its liquidity, the likelihood is that the factory in your constituency will be forced to close". That is a small example of

how we cannot consider regional development policies in a narrow national context.
Equally, I recall in the days of the Labour Government one of their very grandiloquent projects and the remarkable objective of a splendid petrochemical plant in the north of the Highlands of Scotland. When discussing this with the would-be management of this particular concern, I was told that if any difficulties were placed in the way of its obtaining Government assistance in this country it would go to Sardinia, where it could get an 80 per cent. cash grant. That seems to be regional development policy gone mad. It is highly desirable that we should have some co-ordination in a European context to prevent a sort of Dutch auction in regional development incentives taking off into the wild blue yonder. I do not share the anxieties of my hon. Friend the Member for Oswestry on this point.

Mr. Biffen: I shall use this intervention not to engage in a more philosophic consideration but only to touch upon the last point of the story, about which I am sure we would all like to know more. My hon. Friend said that as an alternative the firm could go to Sardinia. I have news for my hon. Friend. There is no likelihood, it seems, of the Commission being the great motive force for economic liberalism in this instance, because the Italian Government took the very good precaution of writing into the Treaty of Rome a protocol covering the Mezzogiorno, which includes Sardinia. So the reality of the situation is not that within the Community there will be a progressive dismantling of intervention. If anything, there will probably be an intensification of it.

Mr. Bruce-Gardyne: That leads me to the point I was about to make when my hon. Friend intervened. I was about to utter a word of warning. I am a little worried about the way the regional policies of an enlarged Community might loom under a certain amount of impulsion from my right hon. Friend.

Mr. Biffen: Not me.

Mr. Bruce-Gardyne: I said "my right hon. Friend". My hon. Friend has not yet reached that eminence.
At the beginning of the debate the hon. Member for Glasgow, Craigton (Mr. Millan) outlined what he foresaw to be some of my right hon. Friend's ambitions in terms of the evolution of the Community's spending. In that part of his speech the hon. Gentleman was not entirely wide of the mark. I can see superficial advantages from our point of view in ensuring that, whereas the first decade of the Community's operation was the decade of the peasants, the second decade shall be that of the lame ducks. There could be the expectation that this would enable us to recover not only our contribution to the agricultural fund but also perhaps a little extra.
I hold the rather heterodox view that the French have not been the prinicipal beneficiaries of the first 10 years of the Community's operation through the common agricultural policy but, on the contrary, have been the principal victims. The result of the enormous transfer payments, largely to France, on the agricultural side in the first years of the Community's operation has been that the transformation and modernisation of the French economy have been delayed, that France has suffered from a considerably accentuated degree of domestic inflation and that the French industrial market has been colonised by German industry.
If my right hon. Friend succeeds in transforming the next decade of the Community's development from the decade of the peasants to the decade of the lame ducks, our economy might suffer similar consequences in that decade to those which the French economy has suffered in the first decade of the Community's existence.
The whole structure of trade within the Community and the development of the Community shows that it is not only more godly to give than to receive, but that it is also more profitable. I should not be happy that any efforts we might be making in the direction of transformation of Community spending would lead to the adoption by the Community of a massive gravy-train operation. This would not be in the overall interests of any part of our economy. If the French are to resist this, as I have no doubt they will, I should not be altogether sorry to see them achieve their objective.

3.45 p.m.

Mr. Douglas: I shall address my remarks in particular to Amendment No. 42. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) was not entirely correct in the points he made in his powerful submission. The important point about regional policy in any community is the amount that is devoted to the region and the differentiation which exists between areas which are to be assisted, be it in the United Kingdom or in the European Economic Community, and areas which are not to be assisted. The Government are in the dilemma that the totality of regional policy is related to proposals contained in this Bill and in the Finance Bill.
The Community is endeavouring to secure a comprehensive regional policy. I support that. It is a matter for debate whether our regional policy would be better inside or outside the Community. It is important that we exert pressure on the Community to secure the greatest amount of assistance possible for areas requiring assistance.
My hon. Friend the Member for Craigton was right in saying that the agricultural policy was a form of regional assistance for French agriculture. I see nothing particularly wrong about that. If agriculture needs assistance to transform itself, it must get it. It would be wrong for anyone to level complaints at us for trying to devote assistance to industries which require restructuring, be it shipbuilding, steel or coal mining.
To operate in parallel our domestic regional policy and a regional policy within the Community, we must seek to get the amount devoted by the Community to this purpose increased and seek to increase the amount that the United Kingdom devotes to regional assistance and also to raise the differential.
The differential is a matter of concern. Are any questions which are being raised at Community level about regional policy related to the 20 per cent. differential between assisted areas and non-assisted areas? Is the 20 per cent. the top figure? It may be the top figure in the mind of the Commission, but it may not necessarily be the top figure that should be in the minds of the Government of the United Kingdom.
I want the Government to be clear about the way in which their policy might develop after our entry into the Community, whether or not they are willing and capable of discussing with the Commission the question of raising the level of assistance above 20 per cent.
No criticism can be levelled at the German Government or at any other Government who want to question our regional policy. I, as a Scot, am perfectly entitled to question the level of regional assistance given to Wales, Northern Ireland or any other part of the United Kingdom. That is the penalty which is paid for being a member of an economic union. The obverse is true:I have every right as a Scot to seek to ensure that the level of regional assistance for Scotland meets the needs of my area.
It strikes me as passing strange that on this very day more than 400 of my constituents will be made redundant in a paper mill. However, some of them will be saved the ignominy of the employment exchange, not by a United Kingdom firm, but by a German firm. If it is true that our regional assistance has proved attractive in this one case to the German firm, I am grateful on behalf of my constituents for the regional policy which this Government have belatedly had to adopt. It cannot be argued, particularly from this side, that British regional policy because it is British is best.
We shall have the opportunity within an expanding Community—the Labour Party has embarked on a substantial study of this—to look at the experiments in regional policy in other parts of the Community, experiments like the IRI and the ENI. I hope that we shall make a contribution to the development of regional policy so that the Community may derive benefit from our long experience, going back to the 1920s and 1930s, in trying to ensure that, when economic changes take place, their ill effects are mitigated and that, when old industries decline, new ones come in.
Having said that, I add my support to Amendment No. 42. I regard it as in line with the principle of parliamentary accountability. If it seems possible that the provisions of the Bill may be affected in any way by any treaty or international agreement, it is right that the Govern-

ment should report to the House and give assurances that our regional policies are not undermined. We ought to be willing to work in harmony with other nations, but we ought not to have our posture in relation to full employment undermined by treaty obligations.

Mr. McElhone: I realise that the hour is getting late and there is still much to do, but I think it right that we should spend a good deal of time on this group of proposals. My constituency is in a special development area, so that what has been said by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and others touches matters of deep concern to my constituents.
We welcome the Bill, but my main reservation stems from paragraph 60 of the White Paper, Cmnd. 4942:
In order to give industry the confidence it requires to invest, the Government intend to maintain the new system of incentives at least"—
this is the important point—
at least until…1st January 1978.
That is the bit that worries me in relation to the Bill. It worried me in Committee, too. No one can say that we held up progress of the Bill in any way, although we did get a bit annoyed at the many CBI speeches we had to listen to, especially on the last day.
The hon. Member for Hastings (Mr. Warren) did not give the full position regarding Article 92, and this is the matter which inevitably worries us—the same goes for similar areas in Wales—because the Treaty makes clear that, where an arrangement conflicts with the interests of the Community, it will be regarded as incompatible with the Community. The Article goes on to cover the various situations which will be allowed, but it is important to note that paragraph (3) lays down that serious unemployment "may be considered".
The difference between "may" and "shall" has been the subject of many debates in the House. I am deeply concerned about it in this context. In paragraph (2) of Article 92, there are three references using the word "shall", but on the question of serious unemployment the word is "may". There is no guarantee.
My hon. Friend the Member for East Stirlingshire (Mr. Douglas)—he has to


leave to catch a plane to his constituency soon—talked about having the best. I am not so worried about having the best; let us have a policy which is adequate to the needs of Scotland, where there are 138,000 unemployed, about whom we had such an unsatisfactory reply from the Minister last night. We are in no way mollified by the answers we have had hitherto. If anything is to come out of our debate on regional policy, let it be a guarantee that, when 1st January, 1978 comes, the situation in Scotland will not be at risk. The figures given yesterday by hon. Members stressing the seriousness of unemployment in their constituencies make the need for such an assurance only too clear.
In his comments on various aspects of Common Market regional policy which may have a serious effect on our policy, perhaps the right hon. Gentleman will reflect also on the removal of tariff and quota barriers, and say a little about the removal of restrictions on capital movements, since this also must affect our approach to regional policy. The same goes for proposals for monetary union, about which a great deal has been said.
I should like to hear, also, about the pricing policy of the European Coal and Steel Community. Common Market policy on this point insists that one must quote base points to which transport costs are added. The present practice of the British Steel Corporation is to quote a standard price for the whole country, a policy which makes it reasonably easy for Scotland to compete. If the Common Market practice is adopted, the Scottish steel industry, already suffering the dire consequences of 7,000 lost jobs, will be at severe risk in January, 1978.
We have heard a great deal about harmonisation in social policy. Misguidedly, perhaps, I have a strong conviction that all the talk about harmonisation is tending towards a negation of democracy as we understand it as a nation. It should be our purpose to have a regional policy which best suits the situation at any given time. On 11th July last year, the CBI was reported in the Sunday Timesas having admitted that the Common Market's approach

would have very serious implications for Britain's regional policy.
I had intended to say a great deal more, but I am conscious of the time and of the number of matters still to be considered. The Government must give some firm assurances about regional employment. Too many Scots from my part of the country have been sacrificed on the altar of sheer competition, about which we have heard a great deal from the hon. Member for South Angus (Mr. Bruce-Gardyne). Any Government—any Commission—must have some regard to social consequences.
However late in the day, the Government can take a little credit for what they did about Rolls-Royce and UCS. After visits by the Minister and others to places such as Clydebank, they began to appreciate the serious social consequences.
If areas such as Glasgow and other parts of Scotland, and Wales, are to be prevented from having the good things in the Bill through regional policy, building up resources and encouraging by public investment some sizeable private investment, those who invest privately must know that public investment under the Bill will last a lot later than January, 1978.

The Minister for Industrial Development (Mr. Christopher Chataway): We have had an extremely wide debate on the Common Market and the possible implications for regional and industrial policies of our membership. I cannot recommend the acceptance of new Clauses 2 and 3 and Amendment No. 42. I understand that those who are opposed to entry into the Common Market, and still hope that we shall not enter want to see the new Clauses written into the Bill. However, they are clearly inconsistent with the European Communities Bill.

It being Four o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE

Ordered,

That the Industry Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Kenneth Clarke.]

INDUSTRY BILL

Question again proposed. That the Clause be read a Second time.

Mr. Chataway: The Industry Bill will be subject to our treaty obligations as many other Acts of Parliament will be so subject. That is understood by every hon. Member. Therefore, to write in new Clause 2 would be at variance with the European Communities Bill which the House has just passed. Similarly, new Clause 3 would clearly be inconsistent with the spirit of the European Communities Bill and with the procedures which have been agreed by Parliament. It would be inconsistent to dig out simply one Act of Parliament—the Industry Bill—when it is passed—and say that if it were amended as a result of any action taken as a result of our treaty obligations it should be done by an affirmative Resolution. It might well be, as those who followed the debates in the House on Clause 2 and Schedule 2 of the European Communities Bill will know, that any Amendment might well be by affirmative Resolution, but clearly I could not recommend to the House that in this Bill there should be a requirement on the Government to proceed by affirmative Resolution.
I can give a firm assurance that it will be the intention of the Secretary of State to include in the annual report the kind of material which is envisaged in Amendment No. 42, but it would not be sensible in such an Amendment to stipulate just one of the important matters which must be a part of the Secretary of State's Report.
The debate has been concerned with wider matters. One or two hon. Members returned to the subject of the inquiry of the Commission by the German Government. Not much was made of that today and I can understand why, although the hon. Member for Penistone (Mr. John Mendelson) and the hon. Member for Glasgow, Craigton (Mr. Millan) referred to it. Probably the right hon. Member for Bristol, South-East (Mr. Benn) recognises that there is not much to be gained from jumping in in the way he did the other day and suggesting that it was clear proof of how regional policy was going to be destroyed by membership of the Common Market. As the German Gov-

ernment have made clear, it was an inquiry and not a complaint.
As a number of hon. Members on both sides of the House have made clear, if we want to have common rules and to be a member of the Common Market, we must recognise that such inquiries will take place. There will be arguments on occasions. As the right hon. Member for Birkenhead (Mr. Dell) rightly said, the same applies to membership of EFTA. It was a storm in a teacup and I doubt if any hon. Member was seriously suggesting that there was anything in it to cause alarm.
Underlying a number of some of the serious inquiries during the debate were questions, for example, from my hon. Friend the Member for Oswestry (Mr. Biffen) about the discussions which have taken place with the Commission in the course of presenting the Bill to Parliament. Both the White Paper and the Industry Bill were drawn to the attention of the Commission. Officials have explained the provisions of the White Paper and the Bill to the Commission. We do not believe, as we have explained on a number of occasions, that there is any conflict between our regional measures and the obligations of membership of the Community. That belief is borne out by the fact that our new measures have been public knowledge for four months without attracting criticism from the Commission or any member State.
It was open to the Commission and to the Community under the interim period consultation arrangements, which are described on page 128 of the Treaty of Accession, to ask for consultations. There have been no requests for consultations on the matter.

Mr. Biffen: Was the Industry Bill made available and shown to the Commission before it was printed and laid before the House?

Mr. Chataway: I do not wish to give a categorical answer to my hon. Friend on that matter. I do not see that there is vast significance in that question. [Interruption.] I have said that the White Paper was shown to the Commission after it was printed. My belief is that after the publication of the Bill the Commission saw it. It was drawn to the attention of the Commission, but


whether the Commission saw it immediately before or after publication—and I believe it was after publication—the point is that under the procedures of the Treaty of Accession, there have been no requests for consultation.
We are convinced—and we are reinforced by the discussions which we have had over a long period with the Commission and members of the Community about regional policy—that there are none of the measures we are proposing in the Bill is inconsistent with membership. That is not to say—this point was made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) and by other hon. Members—that there are no actions which could be taken under the Bill which would not be inconsistent with membership. Clearly, it would be possible to use the powers under the Bill, as it would be to use the powers under a large number of other Acts, in a way which would be totally inconsistent with our Treaty obligations.
My hon. Friend the Member for Cirencester and Tewkesbury rightly and accurately described the way in which Community policy has worked over the years. My hon. Friend drew attention to the fact that there were what he described as "savers" for regional and social policies, and he said that these had been working well.
My hon. Friend the Member for Hastings (Mr. Warren) drew attention to the support which is given by the French and German Governments to their computer industries. We all know that in the Community assistance such as that to be given under Clause 8 is given by member states to their industries in order to support ventures in high technology for example ventures for which the market cannot provide. Provisions in the Treaty, for example in Article 92, could rule out some uses of Clause 8 because the Clause gives very wide-ranging powers. Therefore, ultimately the basic question before hon. Members, and it was one which dominated the debate, is whether or not it is an advantage to have common rules in any of these areas. That is the division between hon. Members but it is not a division between the two sides, because probably as many as half of those who have spoken from the Opposition side have argued in favour of such common rules and recognise that

it is in the interests of the regions of this country as much in the interests of the regions of any other.

Mr. Millan: Can the right hon. Gentleman give us some examples of the uses of Clause 8 which will be incompatible even with our Treaty obligations at the moment when no common regional policy has been adopted?

Mr. Chataway: I refer the hon. Member to the provisions of Article 92 of the EEC Treaty. As he knows these were interpreted by a Resolution of the Council of Ministers in October, 1971. Under that the Community is divided into central and peripheral regions and there is a limit on regional aid.

Mr. Millan: That has nothing to do with the Clause.

Mr. Chataway: It is precisely to do with Clause 8 because it is to do with the central areas of the country. There is a limit on regional aid of 20 per cent. of the project cost in the central areas in order to prevent bidding up for mobile projects. The provisions would impose limits upon the amount of aid which could be given in the central areas but they would not apply in the peripheral areas. We have to exercise our powers under Clause 8 in the same way that we have to exercise our powers under many other Acts of Parliament in a way which is consistent with our treaty obligations.

Mr. Dan Jones: Is the Minister telling us that if the EEC took exception to all the provisions in Clause 8 the Government would brush aside those objections and that the provisions of the Clause would therefore be brought into operation.

Mr. Chataway: The hon. Member will know because he was a consistent attender at the Committee proceedings that the Government have substantial powers to assist industry in the regions. As members of the Community we shall have to exercise our powers in a way that is consistent with our treaty obligations. The hon. Member for Craigton asked me for an example of a Community regulation which would limit the assistance which could be given under Clause 8 and I gave him one.

4.15 p.m.

Mr. Millan: May I pursue the example a little further? Suppose that assistance to ICL was given under Clause 8—I know that was the Government's original intention but for reasons which have not been adequately explained they will now give it under another Act of Parliament—how is the 20 per cent. to be calculated, because in that case the help related to the particular expenditure being assisted is 100 per cent.?

Mr. Chataway: The 20 per cent. limitation on assistance in the central areas is imposed across the board upon the generalised grant system. Nothing in that provision would prevent us from giving the assistance to ICL under Clause 8. I can assure the hon. Member that the decision to give that assistance, which was for research and development support, under the Science and Technology Act, 1965 was taken for administrative reasons and not because of the Common Market. The reason is that we believe it will be more convenient to continue to give assistance for research and development under the Act and that as the general principle we should confine the Bill to those areas in which we do not already have powers. Similarly, as my hon. Friend the Under-Secretary said earlier, we shall be using the Tourism Act to support the tourist industry.
I recognise that there are deeply-held differences of opinion on the matter. Those who take the view that it is not in our interest to have a common policy on regional matters, to have common rules among our European partners, will be opposed to entry into the Common Market and will support the new Clauses which are clearly inconsistent with the European Communities Bill.
I believe that a number of hon. Members who have spoken, including the right hon. Member for Birkenhead, the hon. Member for East Stirlingshire (Mr. Douglas), my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), and my hon. Friends the Members for Hastings and Cirencester and Tewkesbury, have made an extremely strong case for believing that it must be in our national interest and in the interests of any other European country to have such common policies and such common rules.
If there is unlimited bidding up between European countries it cannot be in the

interests of any of us. It is not only the bidding up for mobile industries which would cause concern, although, as my hon. Friend the Member for South Angus said, that could be damaging to any region. If unlimited subsidies are given by competing regions in Europe it could damage the effectiveness of the assistance that we give. I do not believe therefore that the balance of argument this afternoon has gone in favour of those who have taken the nationalist line on these matters. Some may argue that they wish for total independence and suggest that they are appalled by the thought that we might have to co-ordinate our regional policies. I hope that, recognising that there is a fundamental difference of opinion on these matters, a difference of opinion which has been reflected in the course of the European Communities Bill, the House will reject these two new Clauses.

Mr. Benn: The Minister and his colleagues would have simplified proceedings if he and his colleagues had been a little more candid at the outset about the implications of the European Communities Bill for the Industry Bill. The plain truth is that by a series of questions in Committee and in the House and by the new Clauses we have drawn from Ministers, steadily but reluctantly, a full account of what has really happened.
The fact is that the Government had reached the arrangement with the Commission that Bills would be submitted to the Commission. Now the Minister—and I understand a man in this difficult position—not knowing exactly whether it was discussed with the Commission be fore it was published, or after it was published—and if he wants me to give way so that he can give the answer I will do so—

Mr. Chataway: I was anxious that I should not inadvertently mislead the House on even a minor detail, but I can now confirm that neither the White Paper nor the Industry Bill was discussed with the Commission before publication.

Mr. Benn: Not discussed before publication.

Mr. Chataway: Or submitted.

Mr. Benn: The fact is that if there had not been this cross-examination of Ministers on this matter, the House would


never have been aware that a parallel and almost certainly earlier form of consultation was taking place with the Commission before the parliamentary examination.
If we are suspicious, it is because for this Parliament it is the first time in its history that a Minister has come to the House armed with the views of an international body, views which have to be taken seriously, unlike those of EFTA, because, unlike EFTA, which may be disregarded and to which we can just break our word, to use the expression of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), when we are dealing with the Commission, we are dealing with our masters, and that is why we have to take the Commission seriously.

Mr. Bruce-Gardyne: In view of what the right hon. Gentleman has just said, what was he doing when Mr. Richard Good used to discuss with the Labour Government what they could and could not do?

Mr. Benn: If the hon. Gentleman will allow me, I will come to that.
The key to the matter is that Ministers traditionally consult interests, national and international, but the decision is taken by Parliament. What has happened as a result of the Industry Bill, in conjunction with the European Communities Bill, is that the Government consult Parliament, but the decision is taken elsewhere.

Mr. Chataway: No, no.

Mr. Benn: It is no good the right hon. Gentleman saying "No, no"; he has just told the House that the decisions of the Commission will be binding on this country. That is what it is all about. If that were not what it was all about there would be nothing for him to boast about in harmonisation and internationalism and so on. That is the issue.
When he rejected new Clause 1, which was designed for the avoidance of doubt—not that we had much doubt—and the other new Clause, to lay down in respect of the defence of our regional policy that there should be a special procedure, when all that is brushed aside, we know what the truth is, and the truth is that the Minister and his colleagues have

agreed that the final decisions will not be taken by him.
The reason that his assurances are valueless to us is that his own legislation removes his own rô1e as the ultimate decision maker in regional policy. It is not a discourtesy to him or to his right hon. Friend to say that their assurances are valueless. Their assurances are valueless, because they are promoting legislation which will mean that they will require the assurance of the Commission. All they are doing is making highly informed and no doubt genuinely helpful attempts to comment on what might happen.
Raising the German case as I did the other day was enormously worthwhile. First, it drew to the attention of the House the fact that inquiries were already going on with the Commission and that the British Government had not been told about them. I asked the Minister why he had not told the House before Third Reading of the European Communities Bill that the Germans had communicated with the Commission, and there was a simple answer—he did not know:he said so in answer to a supplementary question that I put to him.
Now, in a desire to be helpful, which is always their characteristic, the Germans have put our statements saying for the first time Bills are now being discussed with the Commission, but the Government have never told us. That was the second benefit.
Finally, the Germans have told us not to worry, because they would not expect a statement before the recess anyway. They say:
A detailed reply from the Commission could hardly be expected before the Summer Recess.
The Germans are thus still awaiting a reply from the Commission and whatever the Minister may say about his own expectations of his own marvellous legislation, and every Minister is allowed that, it will not be he who will decide whether the Act is compatible with the Treaty. Neither will he decide whether it may be used in certain cases.
He has told us that the Science and Technology Act, which was designed for some other purpose, is to be the instrument by which the computer industry is


to be supported. We have had the Minister's own statement of his intentions and—

Mr. Dan Jones: Will my right hon. Friend give way?

Mr. Benn: I am thinking about the time of the House.

Mr. Jones: I should like my right hon. Friend simply to distinguish between science and technology and real assistance to the regions.

Mr. Benn: They all come under the provisions of various Acts, but my hon. Friend will divert me into other channels if he pursues me on that matter.
The computer industry had been supported under the Industrial Expansion Act which in all relevant provisions is the same as the Industry Bill. It was necessary to use Clause 8 because it was general selective assistance not connected with the regions. Clause 8 has had to be timed to expire with the end of the transitional period. The Government were afraid that if they launched on a course of supporting ICL under an expiring Clause in a questionable part of the Bill, they might get into difficulties. I venture to tell the House that in my opinion the change to the Science and Technology Act was made for that reason.
It was astonishing that a Minister should announce £14 million assistance under one Act and then write to the man who had asked the question and say, "I ought to let you know that we have changed the Act under which we are giving support". If that was not connected with the application to join the European Community, I should be very surprised.
It is not a matter of raising fears, but a matter of defending our national rights to control these matters. It is a question of whether regional policy is to be under the control of a Minister accountable to Parliament. The reason why the CBI is not at all worried is that the CBI has an office in Brussels. The CBI does not bother to go to the Minister for it can go to the Commission direct or to the Council of Ministers. As the Secretary of State knows, the NFU has an office in Brussels. Plainly, the CBI will bring pressure to bear on individual Members.

as will its counterpart in France, but the real power is to be in Brussels and that is where the CBI and other pressure groups will make their influence felt. This has been brought out very clearly in the statements made by Aims of Industry and others.

Mr. Chataway: It may be of interest to the right hon. Gentleman if I tell him that I am told that the staff of the CBI office in Brussels is one girl.

Mr. Benn: The right hon. Gentleman should not laugh too soon. He knows very well that the NFU has already joined the international organisation of farmers in Brussels. He knows very well that Aims of Industry has announced that it will not be necessary to go to national Ministers, because decisions will be taken elsewhere.
In the course of this week, we have had a major debate about the need to obey the law. When we approach a new law promoted by Parliament, before we assent to it, we had better know how that law is made. If the Government come to the House with a Bill which has been through all its stages—Second Reading, Committee and now Report—and which is to be the law of the land, is that law, which Ministers will say the British people should obey, to be modified by the Commission afterwards without any shred of parliamentary examination?
The whole basis of the social contract upon which our system of government rests is that when we say to somebody "You must obey the law", that statement contains within it the provision that by democratic action he may change the law. If the Government now say that in respect of regional policy—which touches the lives, jobs and prospects of millions of our people—they may not be able to relieve the anxieties of our people because the Commission does not permit it, they are changing by that one process the whole basis of the social contract.
Regional policy has not traditionally been thought up by kind and generous Ministers. Although Ministers of all parties are human, and are concerned with human suffering, regional policy is a product of pressure from people who find themselves oppressed by unemployment; and that pressure produces a


Government response. Why did the right hon. Gentleman change his "lame duck" policy? It was because the pressure from the people afflicted by it was so great that in the end the right hon. Gentleman's Cabinet colleagues said "We shall never win another election, Mr. Secretary of State, if you go on with Upper Clyde and all those policies."
Why does the House think that the Jones-Aldington Report has been produced on the dot? It was because the pressure of the people affected by unemployment produced a change of policy. I go further. Why does the House think that the Labour Government changed their minds on many matters, other than because they tried to learn from their own mistakes? [Laughter.] I warn the House not to giggle at the idea that we in this place are subject to pressure to which we try to respond in the development of our policy. If the House laughs at the idea that Ministers may listen to their constituents—[Interruption.] That is what the House is laughing at. The House is laughing at the idea that any Cabinet might change its mind because of public pressure. Yet time and time again Governments have produced policies to meet problems of unempioyment in the regions in connection with the docks, the railways, the mines and everywhere else. That is what the democratic process is about.
If we introduce into that cycle of pressure and response a wholly undemocratic element—an unelected element—in the shape of the Commission, we are fundamentally changing the relationship between Parliament and the people, and when the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) says that the straight and narrow path of competition must be preserved, and we had better have it done by somebody outside if the British Parliament is too weak to

keep us on it, he is saying that he would rather have rigid competition policies than democratic control of our affairs.

That is how the hon. Member for Oswestry (Mr. Biffen) resolved the conflict in his own position. He does not like intervention, but if he has to have intervention he wants it approved by Parliament, and he would rather preserve the right to intervene within our society—knowing that some Ministers may be weak and agree—than have the whole process taken away and given to a commission in Europe, where no discretion would be left to us.

I tell Government Ministers that this issue is not theoretical or academic; regional and industrial policies touch upon the prospect of jobs for millions of people, tip to now we have always been able to call Ministers to account; we have always been able to argue that Ministers can change their mind, and change legislation. From 1st January next that power will have been taken away from Parliament, from the electors and from the nation. That is a very big change.

I tell the right hon. Gentleman that to try to do this without obtaining the consent of the British public is itself to break the law of the land. The constitutional tradition and custom of this land is that we do not affect the powers of future Parliaments unless we have the explicit consent of the people. It follows that no moral obligation will be laid upon our people to obey the laws imposed upon us by the Commission as a result of the two Bills with which we are concerned. I very much hope that even late on a Friday the House will recognise the historic importance of what we are being asked to pronounce upon.

Question put, That the Clause be read a Second time:—

The House divided:Ayes 25, Noes 72

Division No. 330.]
AYES
[4.35 p.m.


Atkinson, Norman
Jones, Dan (Burnley)
Pavitt, Laurie


Benn, Rt. Hn. Anthony Wedgwood
Kaufman, Gerald
Sandelson, Neville


Cocks, Michael (Bristol, S.)
Kerr, Russell
Shore, Rt. Hn. Peter (Stepney)


Davis, Terry (Bromsgrove)
McElhone, Frank
Stoddart, David (Swindon)


Deakins, Eric
Mellish, Rt. Hn. Robert
Williams, Alan (Swansea, W.)


Dell, Rt. Hn. Edmund
Mendelson, John
TELLERS FOR THE AYES:


Dormand, J. D.
Mikardo, Ian
Mr. James A. Dunn and Mr. Tom Pendry.


English, Michael
Millan, Bruce



Faulds, Andrew
Miller, Dr. M. S.



Jenkins, Hugh (Putney)
Orbach, Maurice





NOES


Alison, Michael (Barkston Ash)
Haselhurst, Alan
Peyton, Rt. Hn. John


Atkins, Humphrey
Hawkins, Paul
Pym, Rt. Hn. Francis


Baker, Kenneth (St. Marylebone)
Higgins, Terence L.
Redmond, Robert


Brown, Sir Edward (Bath)
Hornsby-Smith, Rt. Hn. Dame Patricia
Rhys Williams, Sir Brandon


Bruce-Gardyne, J.
Howe, Hn. Sir Geoffrey (Reigate)
Rossi, Hugh (Hornsey)


Butler, Adam (Bosworth)
Jenkin, Patrick (Woodford)
Royle, Anthony


Carlisle, Mark
Jopling, Michael
Scott-Hopkins, James


Chataway, Rt. Hn. Christopher
Kershaw, Anthony
Shaw, Michael (Sc'b'gh &amp; Whitby)


Chichester-Clark, R.
King, Tom (Bridgwater)
Skeet, T. H. H.


Crouch, David
Kirk, Peter
Soref, Harold


Davies, Rt. Kn. John (Knutsford)
Knox, David
Stanbrook, Ivor


Dean, Paul
Lambton, Lord
Sutcliffe, John


Dixon, Piers
Lamont. Norman
Tebbit, Norman


Drayson, G. B.
Lane, David
Thomas, John Stradling (Monmouth)


Dykes, Hugh
Langford-Holt, Sir John
Thomas, Rt. Hn. Peter (Hendon, S.)


Eden, Rt. Hn. Sir John
Legge-Bourke, Sir Harry
van Straubenzee, W. R.


Finsberg, Geoffrey (Hampstead)
Le Marchant, Spencer
Ward, Dame Irene


Fortescue, Tim
Mather, Carol
Warren, Kenneth


Fox, Marcus
Mills, Peter (Torrington)
Weatherill, Bernard


Gibson-Watt, David
Moate, Roger
Wilkinson, John


Gilmour, Ian (Norfolk, C.)
Monks, Mrs. Connie
Wood, Rt. Hn. Richard


Godber, Rt. Hn. J. B.
Murton, Oscar
TELLERS FOR THE NOES:


Goodhew, Victor
Noble, Rt. Hn. Michael
Mr. Kenneth Clarke and


Grant, Anthony (Harrow, C.)
Normanton, Tom
Mr. Walter Clegg.


Grimond, Rt. Hn. J.
Pardoe, John



Gummer, J. Selwyn

Question accordingly negatived.

New Clause 5

RESTRICTION OF GRANTS

'(l) The Secretary of State may make regulations providing that in any case where the grant which would be payable at the percentages prescribed in subsection (3) of section 1 of this Act would, in the opinion of the Secretary of State, be excessive in relation to the number of jobs provided or safeguarded by the expenditure in respect of which the grant would be payable and the expenditure is not otherwise beneficial to the assisted area concerned to an extent which in his opinion would justify the payment of grant at the percentages so prescribed, the grant will be payable at such lower percentages as the Secretary of State considers justified in all the circumstances of the case.

(2) Without prejudice to the generality of the foregoing subsection, regulations under this section may provide that any restriction of grant will apply only in cases where the grant payable to any persons or relative group of persons, as defined in the regulations, would if it were paid at the percentages prescribed in subsection (3) of section 1 of this Act exceed a prescribed total over a prescribed period.

(3) A regulation under this section shall be contained in a statutory instrument, and such regulation shall not come into effect until approved by a resolution of the Commons House of Parliament'.—[Mr Alan Williams.]

Brought up, and read the First time.

Mr. Alan Williams: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker: With this new Clause we might conveniently discuss the following Amendments:

No. 43, in Clause 1, page 1, line 9, leave out 'capital expenditure incurred' and insert:
'creation of additional employment of persons'.

No. 1, in page 1, line 12, after '(2)', insert:
'Subject to section (Restrictions of grants) of this Act'.

No. 7, in Clause 4, page 5, line 23, at end insert:
'(3) In determining whether and in what manner to exercise his powers under this Part of this Act the Secretary of State shall have regard—
(a) to the relation between the expenditure involved and the employment likely to be provided; and
(b) any consequential effect on employment in any other part of the same or any other development area'.

No. 50, in Clause 6, page 6, line 11, after 'nature', insert:
'and likely to increase employment at least in the ratio of one new job for every £5,000 of expenditure'.

No. 19, in Clause 7, page 9, line 9, at end insert:
'(9) In determining whether and in what manner to exercise his powers under this section the Secretary of State shall have regard—
(a) to the relation between the expenditure involved and the employment likely to be provided; and
(b) any consequential effect on employment in any other part of the same or any other assisted area'.

Mr. Williams: The new Clause and the associated Amendments are intended to re-establish a job creation criterion at the discretion of the Minister. We on this side have always maintained—we are glad that we now have the Government's active support for this—that the investment grant system was beneficial because it was predictable; because it gave direct aid to cash flow, particularly to firms in cyclical industries; because it could be counter-cyclical, by using variations in the rates at the correct time in the cycle, as we did in 1966; and because it is particularly suitable for long-lead industries.

4.45 p.m.

Having said that and claimed that it has certain advantages, we never maintained that the system was perfect. Certain of its imperfections were pin-pointed frequently by hon. Gentlemen opposite—indeed, they were rather exaggeratedly commented upon. During the General Election period the investment grant system was generally condemned by the Conservative Party for its so-called wastefulness. It is right to say that after having been abandoned the system is now being reintroduced, and this is therefore a reasonable time to review whether it had imperfections.

The most sustainable criticism which could be made against the system, one of which we felt deeply conscious and of which hon. Members opposite were aware, was that in certain large projects the cost to the Government far outweighed any regional benefit that was derived from the investment of public money. Yet here the Government are


not simply reintroducing this system; they are doing nothing to eradicate those shortcomings. If anything they are moving in the opposite direction because, as the Sixth Report from the Expenditure Committee "Public Money in the Private Sector" states at page 52:
The criterion of immediate job creation would thus be largely removed from regional incentives.
I do not think the Minister would deny that this is the case. In Committee he admitted it. We are now committed to an abnormally high level of expenditure for regional assistance without any meaningful job criteria.

We have always maintained too that if we are to have the proper industrial mix in the assisted areas, with labour-intensive and capital-intensive industry mixed properly, there has to be a correct mix of incentives to attract each type of industry. Yet at a time when, if anything, the incentives are being made increasingly capital-intensive, the Government are contemplating the abolition of the one labour-intensive incentive, the regional employment premium. It can be legitimately argued that as an inducement it has already been abandoned because, as a result of the doubts cast upon its duration or level if it is carried on in future, businesses looking for sites no longer take it into account. It has therefore ceased to be an incentive for new industry although its continued existence is temporarily beneficial to those industries currently receiving it.

The REP situation and the effect of the Bill make the development areas now relatively more attractive to capital-intensive rather than labour-intensive industry. This is an important shift in balance. Secondly, within the development areas the capital-intensity inducements in this legislation will encourage those labour-intensive firms already there to substitute capital for labour so that we are getting the most expensive form of subsidy, which is actually inducing job reduction among firms already in existence while attracting to the regions, in place of labour-intensive firms going into decline, firms which are capital-intensive.

The inadequate mix of incentives will mean that there will be an unprece-

dentedly expensive cost per job figure at the end of, say, five years when we come to review the effect of this legislation. The effect of the Bill coupled with the REP position will be to minimise job creation from outside and maximise job loss within the development area.

I do not think Mr. Speaker would allow me to develop the argument about the regional employment premium keeping in existence firms which would otherwise have gone out of existence. However, the Government have created such low industrial confidence and such unwillingness to invest that they need a sledgehammer approach—and this Bill is the sledgehammer approach. But even a sledgehammer can be wielded selectively. Surely any assessment of the facts justifies the argument that there should be some sort of job link in the scheme which is being introduced.

As background to my proposition I should like to quote a reply which I received today from the Department of Employment giving comparative figures for the latest month this year with the equivalent month two years go. The increase in the number of wholly unemployed in the North is 29 per cent., in Wales 33 per cent. and in Scotland 45 per cent. The increase in unemployment among school leavers in the North is 65 per cent., in Wales 65 per cent. and in Scotland 102 per cent. The fall in notified vacancies in the North is 34per cent., in Wales 23 per cent. and in Scotland 42 per cent. If we bear in mind that in 1971 redundancies declared in Scotland were three times as high as they were in 1969, four times as high in Wales and five times as high in the North, it is incredibly difficult to understand why the Government are severing the job connection from their incentive proposals.

In any event, the unemployment position does not reveal the true gap which must be filled in the development areas. The activity rates there are substantially lower. Figures which I gave in Committee indicated that, taking the United Kingdom figure as 100, the activity rate among the male population in Wales is 90 per cent. and 73 per cent. among women. In the North the figure is 96 per cent. for males and 85 per cent. for women. Therefore, the job need is far greater than the official figures indicate


because a lower proportion of the population is counted as being among the working population.

There is a further disguising factor, as I am sure Scottish hon. Members will confirm, namely, that there is a migration which is selective in its impact in that it tends to draw many of the younger, more dynamic members of the community away from the valleys of Wales and Scotland. Therefore, in addition to high recorded unemployment, there is high concealed unemployment.

The final factor to bear in mind is that when growth comes—both sides of the House genuinely hope that it will come; the regions desperately need it—the period of growth 1961–66 showed that, relatively, the development areas did not do as well as the prosperous areas. In the South-East, male employment rose 6 per cent. faster than in the development areas. Therefore, I am inevitably concerned at the Government's decision to announce the abandonment of the regional employment premium and their refusal to give details about the phasing-out arrangements. I am equally concerned about the unwillingness to tie the incentives offered to job creation.

On 12th July the Western Mail carried a report about the visit to the secretary of the CBI in Wales by senior officials of the European Commission. The Welsh secretary said:
One point on which the commission was emphatic related to the regional employment premium which at present means that manufacturing industry in development areas receive a weekly allowance for each employee…they are obviously firmly opposed to this and this causes some concern".

It would be helpful to us to know—perhaps the right hon. Gentleman may care to confirm, if it is in order for him to do so—whether, as we hope is not the case, the Commission is in any way involved in the decision to drop the labour, the employment, link with the capital incentives. It would seem to me that, in relation to the unemployment circumstances, the job gap to which I have referred, at this stage it is absolutely imperative that the job link be kept.

No Government have a limitless pocket. The financial assistance envisaged in the Bill is extremely generous in its scope. That I admit quite readily. Even so,

there is a limit. There has to be a limit. Any money which is wasted on ineffective incentives is money which might have been used in another way an effective incentives, as for example in continuation of the labour subsidy. We all know that many manufacturing firms choose to site themselves within development areas regardless of the incentives available, but we know of others—the oil companies almost immediately come to mind—which involve a public cost which is utterly unrelated to the regional benefit which they give to the Government in return. A source of considerable annoyance in the past has been that certain of the oil company chairmen, as my right hon. Friend the Member for Birkenhead (Mr. Dell) pointed out in Committee, have been willing to scoff at the fact that they were obtaining this money. I think we should preserve them from their mirth and give the Minister power to exercise a responsible discretion in this respect.

I hope, therefore, that even at this late stage the Government will feel able to accept our proposal. Other than administrative saving—and, quite frankly, the administrative saving cannot in any terms match the magnitude of financial saving which is possibly available if only one of these major projects is financed with a lower rate of incentive—other than the saving of administrative cost or administrative bother, the only other argument seriously put forward has been that of simplicity. Simplicity is desirable. No one would deny that. The more complex the arrangements, the more difficult it is to get industry to take them into account. But simplicity is not the only objective; it is an objective. Effectiveness is a more important objective. Therefore, we cannot go for simplicity regardless of cost, and certainly we cannot allow simplicity to cause a diversion of resources which would otherwise be available.

5.0 p.m.

Mr. Bruce-Gardyne: I find myself very much in agreement with almost everything that the hon. Member for Swansea, West (Mr. Alan Williams) had to say, although I shall come to a point where I think it will be demonstrated that his words this afternoon did not bear all that lose relationship with those of his own Administration. But that is not the first time. What I can say in general on his remarks is that I found myself


very much in agreement with him, and I can well contemplate the desirability of supporting his new Clause in the Lobby. At the same time, I confess that I infinitely prefer Amendments Nos. 7 and 19, in the names of my hon. Friends and myself, to the new Clause itself.
I do not understand what the Clause means. I do not think that the hon. Gentleman understands it either, because he did not attempt to explain it. I can only think that it is an example of the brilliant and dynamic draftsmanship of the right hon. Gentleman the "Grand Communicator" in one of his Tolpuddle Martyrs performances. I rather wish that the right hon. Gentleman were here to tell us what he meant, because the meaning of the Clause does not exactly leap from the pages of the Notice Paper. That is a further reason for my preferring our Amendments.
The wording of our two Amendments, as my right hon. Friends will recognise, comes straightforwardly from the Local Employment Acts. Having read the Official Report of the Committee stage, I am still not very clear why my right hon. Friends should have decided that this was an opportune moment to remove the employment linkage of those Acts. My right hon. Friend the Minister for Industrial Development advanced, as I suggest, two main arguments for removing the employment link.
My right hon. Friend's first argument was the need to achieve immediacy and automaticity—if I can use some rather dreadful words at this hour of the day. He said that under the Local Employment Acts procedures there were terrible delays and that people were left wondering what was to happen. I know that there were lots of complaints of delay—that is indisputable—but I always thought from what I saw in my own area that they were somewhat exaggerated. The fact is that when people are expected to obtain substantial quantities of taxpayer resources it is inevitable that some careful scrutiny should be given to the way in which those taxpayer resources are to be used. So I do not think that we should carp too seriously at a certain amount of delay to enable proper scrutiny procedures to be carried through.
I argue that this applies with even greater force to Clause 7 than it does to Part I, and that brings me to the other distinction between the new Clause and our Amendments, in that our Amendments refer not only to Part I but to Clause 7. It is very desirable that the employment linkage should apply also in the case of Clause 7.
The second argument which my right hon. Friend advanced in Committee related to modernisation, to which the hon. Gentleman did not refer, although it is important, and is an argument which arguably has some merit. The point is that it is desirable on occasion that the Government should be able to assist firms in undertaking modernisation projects even when those projects do not involve any job creation but will, in the long term, safeguard jobs that might otherwise disappear.
There may be some merit in that case. On the other hand, I have not forgotten listening to the chairman of a substantial firm in my part of Scotland—a stauch supporter of the party opposite, by the way—when he explained how his company had undertaken a modernisation programme with investment costing £1 million. He said:"We would never have been able to go through with this without investment grants. That is why we want them back." His allegiance to investment grants was entirely right and proper in the light of his political allegiance. But he followed this up by saying. "It is perfectly true that as a result of this £1 million investment programme we are not employing any more people. In fact, we are employing fewer people."
I ask my hon. Friend and the House whether it is a very good use of taxpayers' resources to provide perhaps very substantial assistance to investment programmes calculated to reduce employment in areas which are suffering from high unemployment. That does not seem to be entirely logical.
Nevertheless, I accept the argument advanced by my right hon. Friend about how modernisation programmes may, in the long term, save jobs. But, apart from the question mark about the desirability of providing taxpayer assistance in order to have the end result of reducing employment in an area of high unemployment, there is the point that most of


the evidence we have had, which at this stage I shall not go over in detail, is that on the whole the impact of all forms of investment incentive on investment decisions by industry is minimal in the extreme.
Those firms which can benefit from modernisation programmes of investment will be likely to undertake them regardless of whether they get investment grants. So we shall not forgo investment in these instances by saying that they would not qualify for investment grants or selective assistance, because not only do they not create additional employment but they actually diminish it.
There are some firms which ought to modernise and which do not do so. They put employment in their industries at risk as a result. Equally, on the basis of our past experience, I do not believe that they will be encouraged to undertake modernisation and investment, which they would otherwise be disinclined to undertake, by the existence of investment grants or selective assistance under Clause 7.

Mr. Chataway: My hon. Friend is saying that he does not believe that any kind of incentive will induce someone to invest unless he wants to invest and, probably, unless he would have done so anyway. Would my hon. Friend say the same about free depreciation, or about any kind of incentive to investment?

Mr. Bruce-Gardyne: If my right hon. Friend studies my comments in Committee on the Finance Bill, he will find that I said just that.
But at least those forms of incentive are profit related and do not automatically apply to projects regardless of their profitability. As my right hon. Friend knows well, one of the main objections we have always had to investment grants is that they are not profit related in the last analysis. I know that it has been explained that they are more profit related than they were, but that does not alter the fact that a totally non-viable invesment will still obtain investment grant.

Mr. Gerald Kaufman: Surely the hon. Gentleman must recall that, for better or for worse, and for whatever kind of employment is provided—which might have been very small

in the light of the arguments to which we are used from him—the aluminium smelter would never have gone to Anglesey if it had not been for investment grants. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) will be able to confirm that. The representatives of Rio Tinto Zinc said that to a Select Committee.

Mr. Bruce-Gardyne: It would not altogether surprise me if the time came when the citizens of Anglesey regretted that decision. All sorts of things are said to Select Committees. In the last Parliament the Select Committee on Scottish Affairs heard the most wonderful gobbledegook from representatives of the Scottish Office about the magnificent effects of the incentives they had. It is attractive for civil servants to be able to say that they have a bigger and better gravy train behind them than people in other areas. However, that is not germane to this argument.
In Committee my right hon. Friend said this:
…when we come to the question of selective assistance I shall argue that it will be right for the Department, in administering selective assistance, to try as effectively as we may to estimate the effect upon employment, and shall suggest at that point that it will be right for the Department to discriminate the terms on which loans are given in favour of firms which are likely to increase employment."—[Official Report, Standing Committee H, 13th June, 1972; c. 94.]
In these circumstances I greatly hope that my right hon. Friend will be prepared to accept Amendment No. 19 which would secure that.
There are the more general considerations regarding the desirability of employment link to which the hon. Member for Swansea, West referred. This is a question of the very highly capital intensive and expensive projects which are unlikely to create significant employment. The hon. Gentleman gave the very good example of the oil industry.
While the hon. Gentleman was talking I could not help recalling the frenetic efforts of the Labour Party to provide up to £25 million in investment grants for a project which was calculated to produce 300 jobs at Invergordon, a project to which I have referred earlier and to which I shall refer in greater detail at a later stage of our discussions, because


the full saga of this entertainment is even more relevant at a slightly later stage.
All that I say at this point is that the average cost per job which might have been created was £72,000. Taxpayers cannot be asked easily to accept that it is a right and proper use of their money which we are voted to Parliament to defend.

Mr. Dell: The Labour Government did not strive to pay out money to the company to which the hon. Gentleman is referring. The Labour Government would have been bound under the law as it then existed to pay out if the demand had been made. The hon. Gentleman should give one member of the Labour Government at any rate this credit, that that experience helped him to move in Committee two separate Amendments along the lines of that which my hon. Friend the Member for Swansea, West (Mr. Alan Williams) has now moved in an attempt to avoid such a thing happening again.

Mr. Bruce-Gardyne: I accept that from the right hon. Gentleman and in all fairness exonerate him from my criticisms on this point. It was not my impression that some at least of his right hon. Friends were entirely passive in their approach to this project.

Mr. Adam Butler: I am following my hon. Friend's argument in regard to the aluminium smelter at Invergordon and the consequent figure of job opportunities—

5.15 p.m.

Mr. Bruce-Gardyne: I apologise. Perhaps I used verbal shorthand, not wishing to develop the full story at this stage. I was referring not to the aluminium smelter but to a remarkable scheme called Grampian Chemicals, a projected petrochemicals plant. It was, perhaps, an outstanding example of the desirability of some form of employment link, at least in relation to very large projects, in a scheme of investment grants or selective assistance. Notwithstanding what my right hon. Friend said in the passage which I have quoted, we have no evidence that the Government have taken specific action to avert a situation of that kind.
We all recall the comments of our former colleague Dr. Jeremy Bray on the effectiveness of the investment grant system in action—

Mr. Dan Jones: On a point of order, Mr. Deputy Speaker. I apologise to the hon. Gentleman for interrupting him but, in view of the volume of work which is before the House and the need to get the Bill, may I, through you, Mr. Deputy Speaker, seek to prevail upon hon. Members to mention only salient points and not to go into academic digressions which take up the time of the House?

Mr. Deputy Speaker (Mr. F. L. Mallalieu): Order. That is not a point of order.

Mr. Bruce-Gardyne: I assure the hon. Gentleman that I shall stick to salient points. On the matters now before us, I have a lot of salient points to make, but, no doubt, if he bears with me, we shall get through them in due course.
I was saying that we all recall the cogent arguments of our former colleague Dr. Bray, and the evidence which he produced of the way in which the investment grant system could positively add to the unemployment problem in the development areas.
In the light of the hon. Gentleman's intervention, I shall not labour that point. It is clear in all our minds. But I must emphasise the strength of the point made by the hon. Member for Swansea, West about the capital-intensive nature of the whole range of incentives offered under the Bill. This is one of the aspects of the Bill which causes me considerable concern—I admit that there are others which cause me even more concern—and about which, representing an area with, alas, high unemployment today and relatively low activity rates, I am especially worried.
The hon. Member for Swansea, West elaborated the argument about the extent to which the capital-intensive bias is intensified by the projected phasing out of the regional employment premium. I have never been much of an admirer of the REP. It suffers from two fatal defects—the Hungarian reflex against the service industries, conflicting with the sort of proposals in the new Clause which the hon. Gentleman himself recommended earlier—and the fact that it is a poll tax.
I have for a long time favoured the imposition of a congestion tax on a payroll-related basis which would act not as a subsidy to employment in the areas where there is room for industry to expand so much as a tax on excessive employment in areas of high congestion, a tax related to the payroll so that there would be a considerable fiscal incentive, so to speak, to a company to send not just its labour force from Oswestry to Angus but its managing directors and research and development staff as well. This is not achieved by the regional employment premium. The regional employment premium is akin to all the various measures we have pursued over the years to encourage development of the advance factory economy.

Mr. Alan Williams: In Committee we moved an Amendment dealing with REP but a similar Amendment was ruled out of order on Report. I made the point in Committee that we were not necessarily committing ourselves to a labour subsidy on any one basis. It could be ad hominem or ad valorem—it does not matter. It would depend on the objective view which the Government wished to achieve. I take the point the hon. Gentleman is making, but we put forward the proposition in Committee.

Mr. Bruce-Gardyne: I noticed what occurred in Committee, but there is still a distinction between us. I have been arguing for a congestion tax in the areas of over-employment and over-congestion rather than for an employment subsidy in the development areas. If there are problems in a European context about an employment subsidy, I put it to my right hon. Friend that there would probably be no problems in terms of a congestion tax. The arguments for such a tax are much stronger in the United Kingdom context.
I have heard the argument advanced by some of my right hon. and hon. Friends that one of the troubles about the development areas is that they tend to lack labour-intensive industry which would benefit from unemployment linkage in investment incentives. That is not true. Certainly in Scotland we have a number of relatively labour-intensive industries. There is the classic example of textiles which, notwithstanding a considerable degree of mechanisation in

recent years, still remains a relatively labour-intensive industry. This particularly applies to the textile industry in the constituency of the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel). There are also some sections of the micro-circuitry industry in Scotland which are labour-intensive. It is not true to say that we do not have labour-intensive industries which could benefit from such a linkage in the development areas.
There is another aspect of Amendments Nos. 7 and 19 which does not come in the new Clause. That is why I prefer them. Amendment No. 19 refers not only to
the relation between the expenditure involved and the employment likely to be provided
but to
any consequential effect on employment in any other part of the same or any other assisted area.
I referred earlier to the anxiety expressed by the parent company of a factory in my constituency about the impact that the new financial fund set up for the assistance of industry in Northern Ireland might have on the competitive position of that factory. That is the sort of thing about which we are concerned. That anxiety existed because the Northern Irish had their public investment fund set up but we did not have such a fund on this side of St. George's Channel. Now we have one. We need some assurance from the Government that before large sums of the taxpayer's money are presented to firms in the private sector under either Part I or, above all, Clause 7 of the Bill, careful thought will be given to the competitive position of other firms in the same industry in other parts of the development areas. As was pointed out earlier by the hon. Member for Glasgow, Craigton (Mr. Millan), 48 per cent. of the population of the United Kingdom now lives in one of those areas and there is thus every prospect that we shall find ourselves robbing Peter to pay Paul.
If I found that a factory in my constituency was threatened with closure not through any fault of the management and not because of a failure of commercial viability, but because the Secretary of State had decided to give a special dollop of extra high content gravy for a factory in, for example, Oswestry, which was not


a viable proposition, I would take it very much amiss. We need much clearer and more specific assurances than are written into the Bill at the moment. If acceptance of the Amendments would complicate and delay procedures for the provision of assistance, that is a relatively small price to pay. If we are not to rob one development area to help another, we must have clearer assurances in the Bill. I therefore hope that the Minister will accept my Amendments.

Mr. Pardoe: The hon. Member for South Angus (Mr. Bruce Gardyne) began his speech by saying that he preferred his Amendments to the new Clause moved from the Opposition Front Bench. He will not mind if I say that I prefer my Amendments Nos. 43 and 50. The first seeks to insert in Clause 1(1) what should be the central purpose of the Bill—the creation of jobs. It will make the subsection read:
The Secretary of State may make a grant to a person towards approved creation of additional employment of persons".
Amendment No. 50 provides that approved capital expenditure must be
likely to increase employment at least in the ratio of one new job for every £5,000 of expenditure".
I am not hard and fast about the figure of £5,000, but I presume that we all believe the main intention of the Bill is to create jobs in the development areas. But nowhere in the Bill is that central purpose stated. It is amazing, but then the whole Bill is amazing, an amazing conversion of the Government to a policy of direct intervention.
We can remember the speeches by Conservative leaders and by the Prime Minister when he was Leader of the Opposition before the last election when he spoke about getting value for money in the development areas. He criticised the Labour Government for spending money and for over-spending in the creation of new jobs without getting a satisfactory return on that money. I welcome the Government's new-found policy of intervention in the development areas. I wish they had never dispensed with the policy of intervention in the first place. I hope now that they will not throw the baby out with the bath

water, because there is a danger that they will do so.
We are discussing a considerable sum of money and in the Bill considerable powers are being given to the Secretary of State. We must be sure that all this will be used for the purposes we have agreed upon, for the creation of employment. That is not a hypothetical argument, because we have already an example of an enormous sum of public money being spent under the regional development legislation by the last Government for entirely different purposes. I am referring to the aluminum smelters.
I have to declare an interest. I am not involved financially with any of the three aluminium smelters but, as the right hon. Gentleman knows, I am involved with the aluminium industry as a member of the London Metal Exchange.

5.30 p.m.

The aluminium smelters were not set up primarily to produce employment. They were set up to use what we thought was an excess supply of cheap electricity and to save imports. But the figures of the costs of jobs created raise a whole host of questions. For instance, the Lincan smelter at Lynmouth in Northumberland, give or take a few million, will cost about £65 million, depending on when it is finished, and will employ about 650 people. I do not know whether they all lived locally before the smelter was built, but I suspect not and about 200 technicians who would have been employed somewhere else must have been brought in. But even at a figure of 650 that works out at £100,000 investment for every job created. I know that the coal contract to supply the electricity power station has to be taken into account as creating many jobs for miners for a long time ahead.

However, at Invergordon there is no saving grace such as that coal contract. The smelter is owned by British Aluminium Tube Investment and the American Company Reynolds. It cost £37 million and is employing about 300 local employees, which works out at £90,000 per job.

I am not saying whether Anglesey should have a smelter. If the people of Anglesey want a smelter, I do not see why it should be taken from them. It is owned by Rio Tinto Zinc, British


Insulated Callender's Cables and the American company, Kaiser Aluminium. It employs about 700 local employees and about 100 specialists and jobs for the 700 local employees cost about £65,000 each, so I suppose that that may be said to be the best value that the taxpayer has.

Mr. Dell: Surely the hon. Gentleman is not suggesting that those are the figures of Government grants. I accept that the primary purpose of the aluminium smelter project was not the creation of employment, but it is absurd to suggest, as the hon. Gentleman appears to be suggesting, that the total cost of those plants came from the Government by way of grant.

Mr. Pardoe: Theright hon. Gentleman has misunderstood. I am not saying that that is all grant, but it is the total level of investment. As the Government are encouraging investment, we ought to be concerned to ensure that that investment is made wisely, especially when investment is scarce.
Sir Val Duncan told the Select Committee, I take it, not that the aluminium smelter would not have gone to Anglesey, but that it would not have existed, that it would not have been built anywhere, and the reason is that there is no need for a smelter. All three aluminium smelters are entirely superfluous to anything that could be called a balance of world supply and demand in the aluminium industry. They were built as a direct result of the use of money that the House had voted primarily to create jobs, and they did not create all that many jobs. I suspect that the money was syphoned into an endeavour which the House never intended.
Those who follow the aluminium market know that new smelters are going up everywhere and that the world is saturated with aluminium of all sorts. The taxpayer is getting an extraordinarily bad return and I doubt whether he will ever get a satisfactory return on this investment, either in jobs or in any other way. Because of the close-knit nature of the aluminium industry in Britain—and I will not use any other description—many users of aluminium, both manufactured and semi-fabricated, are paying and will continue to pay vastly above world price for aluminium that those

subsidised smelters produce, and they regard that as entirely wrong, for it makes no kind of sense economically.

Mr. Biffen: Before the hon. Gentleman leaves this sad and unhappy catalogue, would he not also agree that almost the final insult was that so much of the argument for the subsequent rationalisation was the important rôle that would be played in our import-export relationship to protect a rate of exchange which has gone anyway?

Mr. Pardoe: Of course, but since the hon. Member and I have probably believed in a floating £ for as long as each other—and probably longer than other hon. Members—we would have provided the answer before the money was spent and wasted. So long as one floats the £ there is no need to spend money on import saving in this way.
I do not suggest that we have generally wasted money on regional development. I represent a development area, and I know only too well the enormous advantages that development aid can give, in terms of the number of jobs created. I am not arguing from a general point of view.
I turn to the point made by the right hon. Member for Birkenhead (Mr. Dell) in his intervention. In 1969 I checked to see what value we were getting, in terms of Government grants per job created, and in an answer to a Question that I put down I was told that between 1964 and 1969 the average commitment per job by the Government in the Welsh development area was £694 and in the Scottish development area it was £677. The total for the United Kingdom was £629. For the South Western development area it was £440. None of those figures is excessive. I should be happy to spend that money and a good deal more—indeed, our Amendment mentions the figure of £5,000—in order to create a job. But to talk about spending £100,000 to create one job is a kind of madness.
We ought to write this into the Bill before we give the Secretary of State these huge powers to allocate this vast sum of money. I cannot understand why it is not in the Bill, unless the Government are being very devious. Are they trying to increase total investment generally under cover of regional aid? Have


they considered the state of British investment? My word! it hardly brooks looking at; it is a very sad picture. Have they decided that something must be done, but, being unable to take the loss of face required in accepting grants generally, have decided to increase British industrial investment by this means?
I believe that they will fail. I take up the point made by the Minister about investment incentives. I do not believe that there is any evidence, anywhere in the world, that investment incentives of any sort create the totality of investment. They do not add to the totality of investment. One can decide, by varying grants, in which places investment improvement takes place. One can decide whether investment—perhaps in a world market—takes place in Chile, Anglesey, or somewhere else. One can certainly decide whether it takes place in London or Cornwall.
All the evidence of the last few years indicates that, basically, businessmen must decide whether their investment is favourable, and the question whether the Government are prepared to lash out taxpayers' money, give them tax allowances, or make grants, is totally irrelevant to that decision.

Mr. Alan Williams: The hon. Member may be considerably overstating his case. In 1966 we were given two estimates of investment intentions—the Government's and the CBIs, published early in the year. The CBI survey indicated that there would be a drop in investment of 23 per cent, and the Government survey gave a figure of 9 per cent. On the basis of the evidence available the Government increased investment grants by 5 per cent. as a cyclical measure for two years. The actual fall, far from being 23 per cent., or even 9 per cent., was 3 per cent. and the cycle was almost eliminated.

Mr. Pardoe: One could argue that there was a "cause and effect" relationship. I cannot prove it, but there may have been a minimal effect of that kind. The hon. Member needs to look more carefully at the question of forecasts given in CBI surveys over the years and compare them with the actual results. Everybody knows that investment intentions, as given in answers to a questionnaire, are often as wide of the mark as the answers

that were given to opinion pollsters who asked people who would win the last General Election. We cannot run the economy on the basis of this kind of survey, although it may be a little helpful.
I should like to see many other kinds of direct employment incentives in the Bill, though this is not the place to state them, I regret the removal of regional employment premium. I should like to see a travel-to-work grant in rural areas to increase the activity rate in some of them. A regionally varied payroll tax, what has been called a congestion tax, has been part of my party's policy ever since my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) produced a pamphlet back in about 1960. One of these days a Government will get around to introducing it. They always do, but it takes a long time, and the British people have to slog through blood, sweat and tears before eventually a Government see sense and adopt Liberal policies.

Mr. Chataway: It may be for the convenience of hon. Members if I intervene now, because I hope I can help the House. I believe that most hon. Members are anxious that we should make progress and recognise that we have a good deal left to do.
The hon. Member for Cornwall, North (Mr. Pardoe) made a number of observations, which exposed some misconceptions about the purpose of the Bill and the nature of the incentives available. He supported the argument of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) that it is impossible for Governments by any incentive to induce businessmen to invest. I have great respect for my hon. Friend's views on these matters and know that they are based on a good deal of thought. [Interruption.] I hope I have not misrepresented his view. I see that I have.

Mr. Bruce-Gardyne: Yes. I had been saying that all the evidence was that these forms of investment incentive were a minimal consideration in investment decisions by private industry. My right hon. Friend then interrupted and asked whether that also applied to free depreciation and the like. I said that in my view it did.

Mr. Chataway: I am sorry. I exaggerated my hon. Friend's position. But


he is arguing that investment incentives, of whatever kind, can have a very small effect. It would take a great deal of believing that it would not make any appreciable difference to a businessman to have half the costs of his initial investment met. I find it hard to believe that the free depreciation provisions introduced by my right hon. Friend the Chancellor in this year's Budget will have no appreciable effect and that the fact that all over the country outside the assisted areas 35 per cent. of the initial capital cost of an average project will be met from taxation will have no effect.
Obviously my hon. Friend's views will not be arrived at lightly, but the majority of people will find it difficult to believe that a businessman, with the cash flow advantages that will come to him from having one-third of his initial investment met, and the calculations that flow from his projections of return on capital if he has to provide only two-thirds rather than all the investment, will say that that is insignificant.

Mr. Skeet: While I concede that the aluminium smelters would never have been built if the grants had not been made, may I ask whether my right hon. Friend concedes that even if 50 per cent. is allocated, if it is allocated for a factory or plant in the wrong part of the country, where transport and fuel costs are too high, a firm will not go there? No matter what the grant, it will not accept it.

Mr. Chataway: That is very much part of my argument, that there is no reason to believe that investors will be so stupid as to invest foolishly, whatever the size of grant available.
The point I am making is that I find it very difficult to accept the proposition which underlies the argument of my hon. Friend the Member for South Angus about any kind of investment incentives anywhere, whether free depreciation or, as we propose here, a combination of free depreciation and regional development grant not subject to tax and therefore, as he rightly said, very much profit-oriented, in contrast to a system based entirely on investment grants, such as prevailed until two years ago. It is a little difficult to say that those investment incentives will have no effect whereas a congestion tax will result in a significant number of firms immediately moving out

of London to Scotland. If my hon. Friend is arguing the impotence of Government in one direction he ought to acknowledge the limitations of its powers in another.

5.45 p.m.

Mr. Alan Williams: Since the right hon. Gentleman now sees with such absolute clarity the beneficial effect of the grant, may I ask why the Government abandoned it?

Mr. Chataway: That is a point the hon. Gentleman has made many times. It is a small debating point. The hon. Gentleman knows that the case has been answered on many occasions. What we are proposing here is to maintain the differential between the assisted areas and the rest of the country. We believe that the most effective kind of investment incentive is one that is tax-based. The basis throughout the country today of the incentives is 100 per cent. depreciation. When my right hon. Friend the Chancellor of the Exchequer extended free depreciation to the whole country, in order to give a measure of advantage and additional incentives in the regions the regional development grant, not to be counted for tax, was introduced. That is a different proposition from the investment grants we had before and I hope we will not go back into that question.
The Amendments deal with two specific parts of the Bill. First, there are regional development grants and then there is the selective assistance that may be given under Clause 7. For the general run of regional development grants I believe that the argument we are now putting forward is extremely strong. I hope my hon. Friends will think again about their Amendment. As the House knows, my right hon. Friend the Secretary of State and other members of the Government were involved for a long time in consultations before introducing this package of regional measures which has been widely welcomed.
One of the major changes that was urged upon my right hon. Friend was that there should be a system of incentives in the regions which was simple, predictable and direct. If we reintroduce a job link—if we insist that the grants are paid only if so many jobs are created—we immediately have to return to a system in which we do pay not on expenditure


and receipts but on each project, which has to be examined and an assessment made—in many instances, it would be only a speculative assessment—of the number of jobs to be created. We are back with some of the features of the Local Employment Acts which have been shown over the years to be least acceptable in the regions. When talking of the run-of-the-mill regional development grant case, the argument is extremely strong for what we have proposed.
My hon. Friend the Member for South Angus referred to the question of modernisation. The consultations which preceded the Bill showed that in the regions, perhaps particularly in the North-West, there was a very strong feeling that an incentive was needed for firms to modernise. We are concerned not simply with levels of employment but with making the regions better places in which to live. In view of the legacy of dereliction and the state of much of the industry in the North-West, one cannot doubt that one of the major needs—I am sure that my hon. Friend the Member for Cheadle (Mr. Normanton) will acknowledge this—is to modernise old, outdated factories and premises. If we say that only those projects which will create new employment can qualify for investment incentives, we give no incentive to improvement projects.

Mr. Tom Normanton: I am grateful to my right hon. Friend for laying emphasis on the situation in the North-West. I realise the depth of his feeling after his visit to that part of the world and after discussing the problem. But I very much doubt whether anything will render service to the North-West or any other part of the country unless the ultimate objective of the investment is profit. If it is purely a matter of investment for the sake of it and changing the date on a machinery manufacturer's plate from 1927 to 1977, that is not the kind of help which the North-West wants. If my right hon. Friend is prepared to recognise certain criteria, he will be serving the best interests of the North-West.

Mr. Chataway: I am talking about the regional development grant. The profitable firm will get substantially more out of a combination of free depreciation and regional development grant than the unprofitable firm. The system which we

propose gives a relatively small incentive to the unprofitable firm. The thrust of the system is directed towards encouraging the profitable firm.

Mr. Bruce-Gardyne: With respect, my right hon. Friend has not grasped the meaning of Amendments Nos. 19 and 7. Amendment No. 19 states:
In determining whether and in what manner to exercise his powers under this section"—
that is, Clause 7—

Mr. Chataway: I have not yet reached the question of Clause 7.

Mr. Bruce-Gardyne: The same point applies to Amendment No. 7. Amendment No. 19 goes on to say that
the Secretary of State shall have regard—
(a) to the relation between the expenditure involved and the employment likely to be provided".
It does not say that my right hon. Friend can give assistance only according to whether a particular number of jobs are created.

Mr. Chataway: The regional development grant would then cease to be automatic. I am advised that the words mean—I should have thought this was my hon. Friend's intention—that the Secretary of State, in administering the regional development grant, would be required to reintroduce the vetting process and to give grant only if new employment would be created—

Mr. Millan: The Amendment says "shall have regard to".

Mr. Chataway: I am advised that the meaning of the Amendment is that the Secretary of State would not be able to give the grant unless new employment was created. I find it very difficult to know what is being proposed if no effective limitation is to be placed on the Secretary of State. If it is being said that the regional development grant may be paid at this level automatically, irrespective of whether it will create more jobs, no limitation is being placed on my right hon. Friend. I am talking only about the regional development grant.
I wish to come to what I thought were the matters of greater concern to my hon. Friends, namely, Clause 7 and the regional development grant in connection with larger projects.

Mr. Brace-Gardyne: With great respect, I think my right hon. Friend is making rather heavy weather of this. What one is saying is that the job creation which is likely to result from the allocation of a particular investment grant should be taken into account and be considered—yes, all right, it diminishes the degree of its being automatic. But we are not saying that the Minister should lose his discretion to support a scheme of modernisation even though it does not create employment, if in his judgment that is the decision he arrives at.

Mr. Chataway: That is Clause 7 and selective assistance to be given. What I am talking about is my hon. Friend's first Amendment and regional development grants payable automatically at the levels prescribed in the Bill just like free depreciation, which before the Budget was the difference between the regions and the rest of the country and was paid automatically irrespective of whether the project was one of modernisation or created new employment. My hon. Friend's Amendment, if it is to have any bite, must mean that the whole basis is to be changed; the Secretary of State will not automatically give grant; it will become discretionary and not automatic. That, I believe, is very much contrary to the whole purpose of the investment incentive which has been devised by my right hon. Friend the Secretary of State and very much contrary to what has been urged upon us by the CBI and by most of those involved in regional programmes.
Let me turn to what I think is a matter of greater concern, certainly to the right hon. Member for Birkenhead (Mr. Dell) and, indeed, to my hon. Friends:that is, not the general run of projects but very expensive projects which may be capital intensive. My hon. Friend the Member for South Angus has mentioned one or two such projects which have caused him concern. I believe there is a good deal more complexity to all this than is sometimes suggested. It is easy in speaking of a very large project to divide the capital cost by the number of people employed in it and show that the cost is, say, £100,000 per job. That can overlook the fact that it is strengthening the finances of the region, improving the rates basis for the local authority

and creating in the area an industrial complex which indirectly may have a very substantial effect upon employment in the longer term. The Grangemouth refinery is one example of a project without which there would not be the industrial complex which exists around it. So I think that there is a good deal more complexity than is suggested—not more than my hon. Friend has suggested, but more than is sometimes suggested in our debates.
None the less I recognise, and I recognised in Committee, that there is reason to have anxiety about some of the very large projects and to wonder whether the degree of assistance which is given really is necessary.

Mr. Bruce-Gardyne: Yes.

Mr. Chataway: I am bound to confess that it is not entirely logical to show any more anxiety at the situation in which we have, as now, free depreciation plus regional development grants, making up substantial help, than at the situation in which we have simply free depreciation; because before the Budget the difference between the regions and the rest of the country was that the regions had free depreciation, equally then, of course, for a very large project, when it could be argued that one was giving in tax relief to that project in the region a totally unnecessary amount of money. Substantially less would be given under the present system if the project was not profitable. There are those considerations.

6.0 p.m.

It is suggested that we should introduce a ceiling, that the Secretary of State should say that for projects above a certain size the regional development grant would not automatically apply and that he might therefore, above that ceiling, choose to give assistance under Clause 7, but that there would not be an automatic grant.

I can tell the House that under Clause 1(1) the Secretary of State has power to exercise discretion in this way. I am prepared to look at the possibility of so administering regional development grant as to incorporate a scheme such as I have outlined, but at this stage I do not wish to be committed in any way or to suggest that it will necessarily prove possible to act in the way I have described.


There are considerable difficulties about administering such a scheme.

Mr. Millan: What the Minister is now saying is quite helpful but, as he say that he will act administratively, will he tell us whether the House will be informed.

Mr. Chataway: I was just coming to that. I hope that what I am saying is of assistance to my hon. Friends who, I believe, are concerned with such very large projects.
I have explained that my right hon. Friend the Secretary of State will have power under Clause 1 as drafted to administer such a scheme. But, as I say, there are very considerable difficulties about the administration. For example, if one sets the ceiling in relation to projects there will be considerable difficulty in determining what is one project. If one were to say that any project over £X million would not automatically receive regional development grant, one would clearly provide an incentive to firms to divide a project into two. If, however, one were to say that no company would receive regional development grant for expenditure above £X million one would be discriminating in favour of the small company, which might have only one project in any case, and against the very large company which might have a number of projects. There are these difficulties and I do not wish to conceal them in any way or to suggest that it would necessarily prove possible to administer such a scheme.
It would be necessary to make an early statement on this matter. I am afraid that I could not guarantee that it would be made before the rising of the House because there would be further work to be done, but I would make an early statement so that it was clear exactly what the position would be.

Mr. Skeet: Will my right hon. Friend deal with Amendment No. 19?

Mr. Chataway: Yes. Obviously I am anxious to move on. I believe that in the main I shall deal with the points which have been the subject of interventions.

Mr. Dell: On this point, will the right hon. Gentleman clarify what he is say-

ing? As I understand it, under Clause 1 (1), the Secretary of State may either give the rate of grant mentioned in the table on page 2 or a nil grant. Is the right hon. Gentleman saying, therefore, that the way he will exercise his administrative discretion is to decide in the case of certain very expensive projects that he will give a nil regional development grant and make it up at a discretionary level by making a grant under the selective assistance Clauses, Clauses 7 and 8? Is that what is proposed?

Mr. Millan: May I add to that point so that the right hon. Gentleman can perhaps answer this point also? The difficulty and obscurity in what the right hon. Gentleman is saying arises because subsection (2) says not that the amount of the grant "may" be the prescribed percentage but "shall" be the prescribed percentage. I am not very clear about how he will be able to do what he wants to do under Clause 1(1).

Mr. Chataway: The way in which it will be done is the way that the right hon. Member for Birkenhead describes. The Secretary of State has the discretion not to pay the grant. He can, therefore, fix a ceiling, and for projects over a certain size assistance could be given on a discretionary basis if it were felt right under Clause 7. That is the scheme I have undertaken to consider. But I should not wish to give the House the impression that the difficulties I have described can necessarily be overcome.
I pass to Amendment No. 19 which deals with Clause 7, and to the argument that all assistance under Clause 7 ought to be related to the number of additional jobs created. Here, as I have made clear, it is my right hon. Friend's intention to maintain a job link. The way in which grants and loans will be administered under the Clause is as follows. Those projects which are modernisation projects which create no new employment—they may safeguard it in the longer term—as a general rule will receive loans on near commercial terms. The rate of interest they will be charged will be a near commercial rate. The subsidised rate of interest will, as a general rule, go only to those projects which are creating new jobs. It has always been the intention to maintain the job link in that way in the administration of Clause 7.
I believe that this is a matter which I did not, perhaps, emphasise sufficiently in Committee and it is sometimes overlooked in the more general criticisms made that the Bill is unduly related to capital intensive projects. The first part of my hon. Friend's Amendment is not necessary, because one of the purposes mentioned in Clause 7(2) is to increase employment. If one were to adopt that part of the Amendment, it would simply duplicate a provision which is already in the Clause—unless the intention of my hon. Friends is to say that assistance under the Clause can be given only to projects which will increase employment, but I do not believe that that is their intention. In the present wording of Clause 7, one of the purposes which my right hon. Friend must have in mind is the expansion of employment. I would simply argue that it is important under the Clause that other objectives should also be allowed to the Secretary of State. For example, he should be able to give assistance to achieve an orderly rundown or to help a project of modernisation.

Mr. Bruce-Gardyne: Clause 7(2), which sets out the purposes mentioned in Clause 7(1), makes no mention of employment qualification.

Mr. Chataway: Clause 7(l)(a):
For the purposes set out in the following provisions of this section the Secretary of State may, with the consent of the Treasury, provide financial assistance where, in his opinion—
(a) the financial assistance is likely to provide, maintain or safeguard employment in any part of the assisted areas,".
Therefore, it is already covered in Clause 7.
I do not recommend the acceptance of Amendment No. 19, though in the administration of the powers under Clause 7 we must continue to pay great regard to the point my hon. Friend makes about the effect of assistance in one area upon concerns in another. Indeed, as the White Paper says, and as my right hon. Friend the Secretary of State made clear on Second Reading, one of the reasons for Clause 8 is to cover the circumstance where assistance is given to firms in an industry which are located in the regions and where, as in shipbuilding, this means that perhaps a relatively small proportion of firms which are not in assisted regions

will be capable of being damaged. I assure my hon. Friend again that this point will be very much in my right hon. Friend's mind.
I hope that, on the basis of what I have said and of the assurances I have been able to give about regional development grants, hon. Members on both sides will not feel inclined to press the Clauses and the Amendments.

6.15 p.m.

Mr. J. Grimond: I was encouraged by some of the Minister's remarks. I was glad to hear that he attaches importance to the provision of employment and that this will be taken into account in administering the Bill when enacted. I was also glad to hear that he will consider the possibility of so administering the Act as to safeguard the public purse from having to disburse large sums of money to large firms to create very little employment.
I welcome those intentions, but I am rather worried about the way in which they are apparently to be carried out, because most hon. Members already have some difficulty in dealing with the administration of Acts such as this. Much discretion is inevitably left with Ministers. Our constituents ask us why they have been granted assistance at a particular rate. Often the reasons are impossible to explain. There is, therefore, always some doubt and sometimes suspicion about the working of Acts.
I am not certain how we are to widen the discretion of the Minister or, indeed, whether we are to find out the principles upon which he will administer the Act. As I understand it, all that the House will have is a statement from the Minister as a result of which a few questions can be asked, and that will be the end of it.
I take the Minister's point that employment is not, perhaps, the only criterion. I also take the point made by my hon. Friend the Member for Cornwall, North (Mr. Pardoe) and by the hon. Member for South Angus (Mr. Bruce-Gardyne) that it should be one of the criteria. To take the extreme case it is anomalous that public money should be given to a very prosperous, large and profitable firm actually to reduce employment in a development area. It may be right that a firm should carry out a reorganisation


but it is wrong that the public purse should be saddled with a proportion of the cost if it will do no good to the community.
Second, I hope that attention will be paid to the danger of simply drawing off labour from one place and moving it to another. The hon. Member for South Angus mentioned Northern Ireland. I feel that we are in danger of giving way too readily to force in our affairs, and that it would certainly be anomalous if other development areas, and, indeed other parts of the world, were damaged because of special aid given to Northern Ireland.
My hon. Friend the Member for Cornwall, North mentioned the aluminium smelter. I shall not go into that question now, but the House will recall that it did a good deal of damage to our relations with Norway. It seemed a slightly curious way for good Europeans to behave. Not only vis-æ-vis Europe but vis-æ-vis the world at large, we must look at our development policies and see how they affect other places.
I am by no means saying that it is not important in some development areas to encourage a sophisticated form of employment which may not give very many jobs in total but which brings new jobs into an area and may raise the general rate of earnings there. What I am saying—I am glad to hear that the Minister agrees—is that the creation of jobs should be one of the more important criteria to be applied.
It should not be forgotten that small projects employing only a few people may be extremely valuable in some places though of little value in others. A project employing 10 to 20 people is of great value to a small burgh though of no great significance in, say, Glasgow or Liverpool. If means can be found to encourage such projects to go to the small burghs, I shall welcome it.
As the Expenditure Committee pointed out, we still know extremely little about how the various Measures designed to help development areas are actually working. In Shetland, there has been a rather remarkable expansion of small businesses, in fish processing and knitwear. Many people say this has happened because Shetland has a good

Member of Parliament. Others point out that they are very fine people there. Some give credit to the Highlands and Islands Development Board. I have even heard it said that some Governments have had something to do with it. In fact, no one knows why it has caught on at this moment when, for years and years, nothing happened.
I agree with the Minister in saying that incentives can be important not in directly creating investment but in stimulating it to some extent, but the intention to invest must be there already, and what we do not know is what creates the intention to invest at a particular time, apart from general economic climate, and soon.
We are too inflexible in our policies. We try to apply the same development policy all over the country, although in one part our aim should be to encourage quite small businesses to expand or to establish themselves, and, on the other hand, we should be trying to mop up unemployment in places like Clydeside or Lancashire. We must be far more flexible for these purposes.
It would be worth the Government's while giving definite encouragement to the universities and technical colleges which are already investigating the working of the various Acts. I have no doubt that the Government are in contact with them. They should be constantly monitoring the way things are going to see that we are getting value for our money, and to see what are the motives which cause investment of one kind or another to take place. I have no time to go into it now, but there are all sorts of motives involved—the environment, education facilities, transport and soon. We have very little idea, as the expenditure Committee said, what the real mixture is which sparks off investment.
The Minister said that sometimes it is right to get a new complex going at very substantial capital expenditure even if the initial number of jobs is not great. I accept that. But, here again, we know very little about the effects. It is essential to monitor developments in places like Invergordon to see whether they are, in fact, sparking off other developments round about or whether they are simply drawing off labour from other parts of the Highlands and concentrating it there.
I shall not delay the House, but this is an important matter, and I must say that I regret that we have so little time to debate it now, and we have so little time, also, to discuss the Minister's administrative principles.

Mr. Ridley: There is a dilemma before the House here. The Russians have no unemployment because they keep the appropriate number of people in each factory to make sure that all are in a factory, whether they are needed or not. The concept that modernisation and mechanisation will produce unemployment and that it therefore should be avoided leads one eventually to the Russian solution. I feel strongly that Russian industry is inefficient and should not be the object of the House. There can be no doubt that it is right always to improve, modernise and reform, even if it results in loss of jobs, because the people to make the new machinery have to be found, which creates new jobs. There is a tertiary effect. That is how economies grow and prosperity expands.
The concept of limiting the assistance under the Bill to a certain level of cost per job is not one which appeals to me. I am always tempted to agree when I hear the Opposition pressing a Tory Government to save money. It is an unusual and extraordinary sound to hear. My first reaction is always to join them in their clam our, but on this occasion it would not be right to do so.
I do not agree with my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) and the hon. Member for Cornwall, North (Mr. Pardoe) that investment differentials make much difference. I think that my right hon. Friend the Minister for Industrial Development was wrong to say that the differential was free depreciation plus 20 per cent. or 22 per cent. The differential between the assisted and unassisted areas is free depreciation across the board and 22 per cent. in special development areas. The only additional lure is the 20 per cent. or 22 per cent. grant. That compares with other systems in Belgium, Holland, France and other countries where there are different levels of incentives.
When one works out the incentive, it is probably of less value than money was two months ago before the Bank Rate

went up from 5 per cent. to 7 per cent. Of course, the Bank Rate may again go up or go down. The variations in the cost of money are greater probably than the value of assistance of this sort. Moreover, Japan has invested per head between three and four times as much as we have, although it has interest rates which sometimes go as high as 13 per cent. or 15 per cent. It must be realised that it is not the cost of money which determines investment. It is, as many right hon. and hon. Gentlemen have said, the existence of the market and the right conditions for making the product which one hopes to sell at a profit. That underlines the folly of the smelter experiment. I was one of the few people who spoke out against the smelter orders when they came before the House. I predicted many of the figures which have been given, except that I added an estimate for the total cost of public funds and the grants under the Industrial Expansion Act. Even at that stage it did not look a starter either on employment, profit or import-saving grounds. We have been given the figure of 1,650 jobs from the three smelters, which is about 500 jobs less than predicted even before the smelters start. We have to avoid that sort of project.
My right hon. Friend announced—it took us all by surprise—that there is to be control over the large cost-per-job projects. Will cost per job be the general criterion, or is it to be the cost per job in large projects? One could conceive a situation where investment of £100,000 would result in the creation of only one job. On the other hand, my right hon. Friend may have in mind projects such as smelters and petro-chemical complexes where expenditure runs into millions of pounds.

Mr. Chataway: It applies only on large projects because, of course, on the general run of projects the cost-per-job criterion cannot be applied. In a modernisation project no new jobs may be created. We discussed this in Committee and I undertook then to look at it. I have said today that on expensive large-scale projects we shall consider applying this criterion.

Mr. Ridley: There still seems to be a need for more explanation and it should be included in the Bill because this is a


major change in the Bill as drafted. I hope that my right hon. Friend will be able to put down an Amendment to achieve his aims because we are not clear about what is involved. What he is seeking could be achieved only by a project-size limit. It would have to run something like this:over a total cost of £X million the Secretary of State shall not advance a grant if the cost per job exceeds £Y thousand. If I have it wrong perhaps my right hon. Friend will correct me.

Mr. Chataway: I shall repeat what I said to the hon. Member for Glasgow, Craigton (Mr. Millan). I am agreeing to consider the proposal that there should be a ceiling calculated either according to the sum of money paid to a firm, or on the size of the project. Above that ceiling the Secretary of State would still have discretion to give assistance if he thought fit under Clause 7 but it would not be a regional development grant.

Mr. Ridley: That clears it up and I am grateful because I was not clear what my right hon. Friend had in mind.
This is a tremendously important group of Amendments and the House would be wrong to let them go without proper comment. I strongly support my right hon. Friend in his desire to be free of rigid criteria. I do not believe that any of the criteria we had before made sense. There was the criterion relating to a 20-mile distance from any existing project. There was also the criterion of viability, there was the employment link, and there were one or two other criteria. In operation they resulted in unfairnesses and in non senses in terms of what one firm received as opposed to what another received, and as the amounts paid to individual firms were secret it was impossible to know what was going on.
There is no other way to do this than to rely upon the discretion of a group of people, whether they be my right hon. Friends or a board or a group of advisers to distribute the public money in the way that they believe will bring the greatest improvement in the employment situation. I know that that is a difficult concept for Parliament to accept, but I still believe, after experience of administering these matters, that it is the best thing to do. If wrong decisions were

made the responsibility would have to fall upon those who held the stewardship of that power. I do not believe that one could do it any other way.

6.30 p.m.

There is another element that should be considered—the reputation and behaviour of labour. It is not a good advertisement for Clydeside that, having given a no-strike guarantee to Marathon, Clydebank yard should be out for one day on a matter which is not even remotely connected with its new employers. That sort of thing does more harm to regional policy than any lack of grants or loans or abolition of REP or anything of that sort. Talking to industrialists when at one time I was administering these powers I was convinced that it was the reputation of labour—the reputation whether or not deserved—which was the biggest single handicap in some regions.

In deciding whether to exercise his discretion in certain cases, my right hon. Friend should take into account these factors and these reputations and make clear that a good reputation would attract not only more mobile industry, but more grant from the Government.

Mr. Dan Jones: I am increasingly aware that time is now the essence of the operation and if it were not for that a number of factors affect my constituency and North-East Lancashire generally, I would not intrude myself on the House. However, I cannot help but reflect on the last observation of the hon, Member for Cirencester and Tewkesbury (Mr. Ridley). He spoiled an otherwise sound speech by referring to qualifications that might attach to labour in the dispensation of a grant. Frankly, were such a consideration ever to be entertained, an impossible obligation would be thrust on the Government's shoulders.
It is incumbent upon the Minister clearly to demonstrate that the reason for subsidising the regions is to subsidise employment and not profit. That was not entirely grasped by the Labour Government, as I could show quite clearly if I had more time.
There is one factor that the Minister must keep in mind and which runs throughout the Bill, although he did not mention it. That is the significance of the regional industrial advisory board. I


take it that these boards will not be some form of automaton and those concerned will have some kind of advisory standing with the Ministry when considering the spending of money, and I should like the Minister to say so. If he is to attract the right kind of men and women to these boards, their terms of reference will have to be such that they have a standing in the eyes of the Ministry that is more than an advisory function, so they should have some executive duties to perform.
I liked what the Minister said about old cotton mills and so on and I am pleased he spelt out that part of the case in such detail. This is clearly a serious problem not necessarily in the North-West but certainly in North-East Lancashire—and in Committee I repeatedly tried to make a clear distinction between the two, for the North-West does not care too much about North-East Lancashire, where we have more than our share of old mills that would not be suitable for modern industrial development. I go on record as saying that I support the Minister in that respect and I am exceedingly pleased that he made the point in such detail.
The other point that I want the Minister to take into consideration was made by my hon. Friend the Member for Swansea, West (Mr. Alan Williams) in referring to unemployment in various regions. What my hon. Friend did not say, but needs to be said, is that there is a tremendous amount of hidden unemployment in North-East Lancashire. Many people, especially women workers aged about 50 years of age, are not comprehensively registered, and are consequently not included in the number of people declared unemployed. I have for a long time advocated that they should be comprehensively insured, as a result of which they would count amongst the unemployed. I hope that the Minister will pay greater attention to that factor of hidden unemployment.
Paragraph (b) in the Amendment should have received more attention from the hon. Member for South Angus (Mr. Bruce-Gardyne). It refers to
any consequential effect on employment in any other part of the same or any other assisted area.
In that respect North-East Lancashire has been hit very hard. Even now I

appeal to the Minister not to make the mistake that we made, and transfer unemployment from one area to another. That is precisely what ICI and Courtaulds did in the case of the Lancashire textile industry. Those industrial giants received millions of pounds of public money and transferred factories from North-East Lancashire to other parts of the country, after which they induced workers from North-East Lancashire to go there to work. Not satisfied with wounding North-East Lancashire to that extent they went round with packets of salt to drop into the wounds that they had made by telling the people from Lancashire that there were also houses for them in the new area.
I ask the Minister to take care not to repeat that mistake, first, because it makes no contribution to the solution of the unemployment problem to transfer it from one area to another and, secondly, because everyone must know that those firms would not have moved unless they had been given public subsidies. I am intensely pleased at being able to make it known throughout North-East Lancashire that the disabilities that we have suffered, with far too many employers looking at old mills and going away saying that they are not satisfied, will be remedied by the Bill.
I have argued consistently that North-East Lancashire should be made a full development area, for the reasons that I have given. I have no doubt that I could easily prove my case, notwithstanding that in the debate on the North-West, on 18th July, many hon. Members opposite opposed that idea. I should have no difficulty in proving to the Minister, or any independent fair-minded industrial court, that for the reasons that I advanced in Committee North-East Lancashire deserves full development area status because of the contribution that it has made to the national economy and the amount of industrial suffering that it has borne as a result.

Mr. Tom Normanton: It gives me genuine pleasure and pride to follow the line of thought of the hon. Member for Burnley (Mr. Dan Jones). We have much in common as Lancastrians with deep roots in the North-West. But perhaps we differ fundamentally on the Bill.
I had hoped to catch the eye of the Chair during the past hour earlier than this, having sat through the debate since ten minutes past one.
I do not intend to repeat any of the points raised either by those who support the Bill or the Amendment. All I will add is a plea to my right hon. Friend to pay special regard to the problem not of the capital-intensive industries but of the smaller firms.
The hon. Member for Burnley and others have suggested the ways in which the implementation of a regional policy to benefit one area has transferred a sore from that area to another, perhaps an old area. That has happened in the north-east of Lancashire and many other parts of the country. The policies which have been pursued have, perhaps by intent—I hope not—or perhaps by accident—that should not be the case—been beneficial, or thought to be beneficial, to the large corporations. At the end of two or three years they have been found painfully and bitterly to have operated to the disadvantage of the small companies.
I do not want to enter into an emotional debate on the relative merits of small or large business. But if a regional policy is to be pursued which will clearly, on the basis of evidence which is to be seen if we look for it, penalise the smaller and medium companies, the Bill must be amended to give recognition to the need to observe some form of criterion. This was very much in the minds of those of us who put our names to the Amendments of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). My right hon. Friend has given certain assurances on the importance of relating jobs to grants. I do not think those assurances are in conflict with, but rather support, what those of us who support the Amendments want to see. In view of the identity of interest on this issue, I do not understand why my right hon. Friend cannot give the point similar recognition.
The second point about the consequential effect on employment is very important, not just in the context of the district, not just in the context of absorbing an excess of labour in one area, but in terms of the dangers which have occurred, the experience of the way in which trade has been shifted from one area into another. I earnestly hope that

nothing in Amendment No. 19 or Amendment No. 7 will conflict with the requirement of the situation, the requirement to lay down a criterion and clearer guidelines to avoid the transferance of a sore from one district to another. I earnestly hope that my right hon. Friend will, if he is to add any further comments on this selection of Amendments, give some undertaking and an assurance that perhaps in another place he will give substance to the undertaking and see that the smaller companies are not prejudiced in the implementation of this Amendment.

6.45 p.m.

Mr. Dell: It would be wrong for me to sit here and listen to the various comments by right hon. and hon. Gentlemen about the aluminium smelter project and not confess—because that would appear to be what hon. Members present would require of me—that I actually negotiated the aluminium smelter project, a fact which did not prevent the Secretary of State for Wales from opening the Anglesey aluminium smelter, which suggests at any rate that he approved of it. I do not want to defend the project—it would not be relevant, although there is one aspect that is relevant.
I would merely say that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was quite right when he suggested that he was one of the few Members who at the time opposed the project. The main complaint was that we did not get on with it fast enough. The relevant point is that it is no use hon. Gentlemen complaining, if they now wish to complain, about the aluminium smelter project and yet support the introduction of regional development grants, because the whole point about the regional development grant is that it may result in the institution in the assisted regions of projects which are not competitive on a pure basis of international competition. Hon. Gentlemen are not saying that if like projects which it could be proved were not competitive on that basis came forward they would not get such a grant, and therefore they are accepting the principle implicit in the aluminium smelter project by agreeing with the Government that a grant system shall be introduced in the regions.

Mr. Bruce-Gardyne: The right hon. Gentleman must realise that the scope of debate at this stage must be restricted


to the Amendments selected. He cannot from that draw the conclusion that those of us who made it clear that we do not like the investment grants therefore like them.

Mr. Dell: If the hon. Gentleman had listened to what I said, he would know I was not attributing that to him. I know he does not like regional development grants. I am pointing out that his Party supports the introduction of these grants. The effect of introducing them is that we create the situation whereby there are projects which it could be said, on a pure basis of international competition, should not exist. I exclude from any accusation in this regard those hon. Members on the Government side who I know are opposed to the introduction of regional development grants. I am not opposed to the introduction of such grants, but that is a consequence of their introduction and I say that it does not lie in the mouths of those hon. Members to attack the aluminium smelter project in the way they have.

Mr. Biffen: None of those who have spoken and who attacked the aluminium smelter decision are to be found among that element of the Tory Party which supports the grants. They have been conspicuous by their silence.

Mr. Dell: I do not know whether that is true. There have been other Members who have spoken who appeared to be supporting the grants and attacking the aluminium smelter project. If what the hon. Gentleman says is right, the implication I draw from the Government's decision to introduce these grants nevertheless stands.

Mr. Ridley: I do not know whether that is quite true. The aluminium smelters were financed under the Industrial Expansion Act because the ordinary industrial development grants were inadequate to provide the quantity of subsidy needed to get the smelters off the ground. They were much more expensive than a straightforward investment grant requirement. This was a special case, and I do not think that the right hon. Gentleman is being quite fair.

Mr. Dell: The only grant aid—I welcome the Secretary of State for Wales who has now reappeared—for the

aluminium smelter project was grant aid given under the Industrial Development Act. Other loans were made under the Industrial Expansion Act, but the Anglesey aluminium smelter and the British Aluminium smelter at Inver-gordon received grants only under the Industrial Development Act.
Now that the Minister has said he will give deeper and even more sympathetic consideration to the point I raised twice in Committee that there should be a way of cut-off, it would be ungenerous not to say a word of welcome to that concession. It is a very important concession because it is desirable that there should be a cut-off. The hon. Member for Cirencester and Tewkesbury expressed surprise that anyone on this side of the House should be interested in public expenditure. He has no reason for such surprise.
We want to ensure that public money is spent sensibly and that it achieves the intended objects. If it does not achieve the intended objects, there is the danger not only of waste of public money but that if such a step were not taken the Government might be faced with the choice of reducing the level of grant in the development areas and the special development areas. I would very much prefer that the Government should cut off some of the assistance to the more expensive projects than that they should cut the rate of regional development grant for industrial development in general. I therefore very much welcome what the Minister said in that respect.

Mr. Biffen: I place on record my appreciation of the Minister's remarks in answering the points raised by my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) and others on what is clearly a vexed issue. I hope it will not offend the right hon. Member for Birkenhead (Mr. Dell) if I say that the vexation is devoid of ideological purity. It derives from one of the oldest and most traditional concerns of this House, namely, the prudent monitoring of public expenditure.
The Minister said that there had been widespread consultations before the Bill was published. We are now at the stage at which parliamentary consultation is proceeding. I am not unaware of the Government's many difficulties at this


time of the year, but the fact that it is inconvenient that we are now conducting our consultations does not lay upon us any responsibility to abdicate them. Indeed, the reverse is the case. Our responsibility is to fulfil our traditional parliamentary role because we are talking about issues of major significance.
The hon. Member for Burnley (Mr. Dan Jones) was uncharitable in trying to terminate the remarks of my hon. Friend the Member for South Angus. The hon. Gentleman subsequently made amends by the eloquent testimony which he gave to the second part of my hon. Friend's second Amendment when he explained the circumstances affecting his constituency. He believed that not entirely unforeseen consequences of Government action in employment terms could have serious repercussions for one area which saw itself as no less deserving than any of its neighbours in terms of employment and the receipt of Government aid and sustenance. We have to think only of the consequences for Harland and Wolff and of decisions concerning the Upper Clyde to realise that this is not a quibble; it goes to the heart of much of what we have been considering.
Above all, the point which still remains and which exercises a number of my hon. Friends is that, aware as we are of the preparedness of my right hon. Friend to meet some of the concern which has been expressed, there is no indication that this will reveal itself in legislative form. Surely the right hon. Member for Orkney and Shetland (Mr. Grimond) was quite right to want further reassurance on this, a point which, I thought., was eloquently underlined by my hon. Friend the Member for Cheadle (Mr. Normanton).
Therefore, the first question which arises is whether what is being requested is incapable of being written into the Bill in any form. Is the Bill of such immaculate conception that in the House of Lords it cannot admit of some Amendment which would meet in legislative form the general anxieties which have been expressed? As I read the Bill it is full of generalised aspirations, and I would not have thought that the addition of one more generalised aspiration—namely, that there should be regard for relativity between expenditure and em-

ployment—would flaw the Bill in such a way as to make it aesthetically unacceptable to the Treasury. So I hope that my right hon. Friend will consider further these representations.
Clearly, we want to do two things. We want to behave in a civilised manner and not stay here and waste time, but on the other hand we want to do our parliamentary duty. I say we want to do our parliamentary duty because since Second Reading—indeed, since the conclusion of the Committee stage—we have had published the Sixth Report from the Expenditure Committee, "Public Money in the Private Sector", a report referred to briefly by the right hon. Member for Orkney and Shetland and to which I hope to refer in more detail on subsequent Amendments. If Parliament is doing its job it ought, out of sheer courtesy to the people of some distinction who served on that Committee, to pay regard to their recommendations and even at this late stage—one of the virtues of Parliament is that it has flexible arrangements—incorporate some of the advice which tendered in that carefully considered report following wide-ranging evidence from people of great eminence who have been major beneficiaries of a good deal of the moneys which have been voted under the provisions of the Local Employment Acts and other legislation which the Bill in part repeals or replaces.
I very much prefer the Amendments proposed by my hon. Friend the Member for South Angus to the new Clause proposed from the Opposition Front Bench, but I think my hon. Friend is right to say that we would like to see some consideration for relativity between the quantum of investment and the jobs created. The Bill is an immensely investment-conscious Bill. We in this country have a long tradition of legislation which has been investment conscious, and almost at every stage of that development whatever happens to be the current fashion is employed as justification for a further boost to industrial investment.

7.0 p.m.

I do not want to open up endless divisions between my hon. Friends and myself, but the prospect of Community membership will be the great argument employed by the Government for making available very large sums of money


linked to direct investment. I do not think that to be an unfair representation of the Government's view. Indeed, at Llandrindod Wells on 17th June the Secretary of State said:
As we go towards our Common Market membership we are faced with the need of ensuring that our industries are timed not just to compete more directly with those of our European neighbours but, in a larger sense, to contribute to the whole Community's efficacy as an industrial force. Recognising that the short fall of investment in the 'sixties has not achieved what is really wanted in this field, the Government has…decided through the Industry Bill to equip itself with the ability to play its part in this necessary modernisation.
That is a very ambitious backcloth against which to be taking spending decisions, yet a great deal of the concern about the Bill, and a great deal of the argumentation, has been in regional terms and has been in employment terms. I therefore believe that unless we are prepared to make some tangible gestures towards the concerns expressed by my hon. Friend the Member for South Angus in his two Amendments we shall be dangerously failing to fulfil what I believe is a proper monitoring function, for there is a very real danger that under this legislation moneys will be expended which will bear little or no relationship to the causes that many who espouse the Bill believe they are serving.

Mr. Alan Williams: As the Bill's strongest defender, and as one who very much looks forward to opportunities perhaps of operating under its powers at a future date, I welcome the concessions which have been made to our arguments by the Minister. He has fully accepted our case. He has vindicated our efforts both in Committee and today to convince the Government that the lessons of the past, regardless of where they were learned, should be reflected in some sense in future legislation. Therefore, happily receiving the Minister's assurance that he will endeavour—we realise that his is not a cast-iron assurance—to meet our objections, I beg to ask leave to withdraw the Clause.

Mr. Bruce-Gardyne: On a point of order, Mr. Speaker. Since the whole argument in this debate has been related not to the new Clause at all but to my Amendments Nos. 19 and 7 which have been taken with it, is it in order for me to answer the points made by my right hon. Friend?

Mr. Speaker: I am afraid not. I selected only new Clause 5 for decision and the Amendments for discussion with it, which does not give a right of reply.

Question put and negatived.

New Clause 8

SELECTIVE ASSISTANCE:ORDERS

'(1) In any case where the Secretary of State proposes to provide financial assistance under Part II of this Act, and it is estimated by him that the assistance will or may exceed £1 million, details of the assistance and the reasons why it is being provided shall be published in the form of a statutory instrument which shall be laid before Parliament and be subject to approval of the Commons House of Parliament.

(2) In any case covered by subsection (1) above no assistance will be paid until the approval therein mentioned has been obtained, except where the Secretary of States certifies that the assistance is required with a degree of urgency which makes it impracticable to obtain such approval before any payment is made and that the assistance or part of the assistance paid before such approval is the minimum necessary in all the circumstances of the case'.—[Mr. Millan.]

Brought up, and read the First time.

Mr. Millan: I beg to move, That the Clause be read a Second time.

Mr. Speaker: With the new Clause it will be convenient to take the following Amendments:

No. 13, in Clause 7, page 8, line 4, leave out 'consent of the Treasury' and insert:
'approval of the Treasury, and provided a draft of any individual proposal for such assistance in excess of £1 million has been laid before Parliament and approved by resolution of the House of Commons'.

No. 59, in Clause 8, page 9, line 16, leave out subsection (1) and insert:
'(1) On the recommendation of the Industrial Development Advisory Board, whose functions are set out in section 9, the Secretary of State may, with the approval of the Treasury and provided that a draft of any individual proposal for such assistance in excess of £1 million has been laid before Parliament and approved by resolution of the House of Commons, provide financial assistance for the purpose of—
(a) maintaining the productive capacity of an industry essential to national defence;
(b) maintaining the productive capacity of an industry which suffers from an unexpected and markedly unfavourably shift in its trading position due to circumstances out side its control.


(c) ensuring the retention of choice of suppliers of products vital to the British economy.
(d) facilitating the contraction of an industry in an orderly manner to minimise the disruption of the economy generally and the social consequences in particular
where, after carrying out all such economic and social assessments as are necessary, he is satisfied that he can demonstrate that
(i) the net costs to the economy, including social costs, of not providing financial assistance are likely to be greater than the net costs of providing the assistance provided under this Act, and
(ii) there is evidence for believing that there is a reasonable prospect of the industry not requiring such assistance other than on a short term basis, and in any event for a period not exceeding three years'.

No. 20, in page 9, line 17, leave out 'consent of the Treasury' and insert:
'approval of the Treasury, and provided a draft of any individual proposal for such assistance in excess of £1 million has been laid before Parliament and approved by resolution of the House of Commons'.

No. 23, in page 9, line 36, leave out '1977' and insert '1974'.

No. 60, in page 10, line 5, leave out '£250' and insert'£150'.

No. 24, in page 10, line 5, leave out '£250 million' and insert '£100 million'.

No. 61, in page 10, line 6, leave out 'two' and insert 'four'.

No. 62, in page 10, line 9, leave out '£150' and insert'£100'.

No. 25, in page 10, line 9, leave out '£150 million' and insert '£50 million'.

No. 53, in Clause 9, page 10, line 24, leave out subsection (4).

No. 55, in Clause 16, page 17, line 5, at end insert:
'(2) Any report prepared under the last foregoing subsection shall contain details of any case where financial assistance has been provided or has been agreed to be provided under Part II of this Act and the total assistance paid or estimated to be paid in the year covered by the report or in earlier or later years has exceeded or is likely to exceed £1 million'.

Mr. Millan: It might be for the convenience of the House, as well as save time, if I speak not only to the new Clause but to the Amendments which are being taken with it, though they are not in the names of my right hon. and hon. Friends.
In Committee and on Second Reading there was a great deal of discussion and a certain amount of controversy about the whole question of parliamentary control. From both sides of the Committee there was an expression of opinion that the Bill did not provide the kind of parliamentary control which there ought to be in view of the potentially very considerable sums of money that would be spent under the Bill. That was particularly so in relation to Part II. The new Clause deals with Part II.
Perhaps the only concession made in Committee to that strong feeling was the new Clause which became Clause 9. I am thinking particularly of Clause 9(4), which provides that where the Industrial Development Advisory Board disagrees with the Secretary of State in relation to the assistance which he is to give under Clause 8, the Secretary of State will make a statement to Parliament about the whole matter. That is the only specific provision at present for any kind of parliamentary control.
In Committee the Minister made great play about the general principle of parliamentary accountability and how Ministers could be subject to Questions, how there were opportunities for debate and so on. I dare say that Ministers may try to use those arguments today. I shall not deal with that at any length because in Committee we made it clear that we did not believe that kind of answer was adequate.
It is often extremely difficult to question Ministers about important items of public expenditure. It is certainly impossible in the ordinary exchange at Question Time to pursue matters to any satisfactory conclusion. Moreover, it is often very difficult to have these matters considered in any way in parliamentary debate because of shortage of time.
That point of view has been vindicated by the report of the Expenditure Committee to which the hon. Member for Oswestry (Mr Biffen) has referred. That Committee has made the point in relation to Concorde. There we have the most flagrant example of this, although there are many other examples. Although there has been commitment to the expenditure of up to £1,000 million, of which Britain is to bear half, there has been no satisfactory system of parliamentary


accountability in the whole of that project. The fact that it has been possible to question Ministers at Question Time has made no effective difference to that. There has been no parliamentary debate on Concorde this year, although it is only in the last year that the ultimate commitment to production of Concorde has taken place. That is an example of what all hon. Members know to be a fairly common experience. Large sums of money are committed but there is very little in the way of parliamentary control.
New Clause 8 seeks to single out items of assistance which have exceeded or may exceed £1 million and to say that where they arise there shall be a special kind of parliamentary control. The Clause is neutral in that is does not say that Part II is good or bad legislation. We on this side think that it is good legislation. Some hon. Members on the Government side think that it is bad legislation, but that makes no difference to the merits of the Clause. Whether it is good or bad legislation, the principle should be established that an item of assistance in excess of a certain sum should be subject to parliamentary control.
The figure of £1 million has been chosen because we were told in Committee by the Minister that from experience the Government had estimated that in a normal year there might be about 20 instances of assistance amounting to £1 million or above. Not every case would have to be subject to a separate parliamentary order. If they occurred within a reasonable space of time, several could be included in one order. Our parliamentary procedures, choked as they are by a great deal of legislation, could nevertheless, in an important area like this, accommodate a procedure for 20 projects in a normal year. There is nothing impractical in parliamentary terms in that. In principle it is important that something like this should be written into the Bill.
Another argument advanced by the Minister in Committee was that it is sometimes important to act quickly and that compliance with a provision for going through parliamentary procedure might lead to a situation becoming out of control. This is a valid point. I would not wish to have anything written into the Bill which would prevent a Gov-

ernment from acting with the utmost urgency in an emergency. Therefore, in drafting the Clause we have tried to provide for cases of urgency where a Minister could act without parliamentary approval if he were to certify that he had to act in view of the urgency of the situation, but he would have to come to Parliament for approval later.
Some of the Amendments being taken with the Clause have a purpose almost exactly the same as what is laid down. I think particularly of Amendments Nos. 13 and 20.
On Amendment No. 23, which would shorten the period of operation of Clause 8 from 1977 to 1974, I need say no more than that we on this side would be resolutely opposed to any such limitation of Clause 8. Our complaint has consistently been that there should be no limitation on Clause 8. We think that the proposals for the reduction in the period have something to do with Britain's joining the Common Market, though we are assured that this is not the case.
The Government have tabled Amendments Nos. 60 to 62 to replace the present provision in Clause 8 for an initial tranche of expenditure of £250 million plus two tranches of £150 million by a provision for an initial tranche of £150 million plus four further tranches of £100 million.
This series of Amendments may have been tabled for bad reasons because of pressure from Government supporters who do not approve of Clause 8. However, we accept these Amendments because they give additional parliamentary control. It is not a substantial amount of parliamentary control when dollops of Government expenditure of £100 million at a time are being dealt with. However, it is reasonable to have one and a half hours to debate the matter. Although these Amendments are welcome for whatever reasons they have been tabled, we do not think they are a substitute for the provisions we propose in new Clause 8 because they are, after all, retrospective.
Once the initial tranche has been taken up, as it were, and the next order comes forward for £100 million, all we can do is talk about how the first sum has been spent, but we can do nothing about it. The money will have been spent by that time without any direct parliamentary


control. This is not, therefore, an adequate substitute for what we propose in new Clause 8.

7.15 p.m.

I need hardly say that we are completely opposed to Amendments Nos. 24 and 25, which are attempts by hon. Members opposite to cut down expenditure under Clause 8.

Our Amendment No. 53 would eliminate subsection (4) of Clause 9. We believe that new Clause 8 and the associated provisions would give much better parliamentary control, and if that were accepted we should be perfectly happy to see subsection (4) eliminated. There is a point of principle here. I realise that it was put in to be helpful, but to a large extent it misses the point. It is important in one sense to know that a Minister is acting against the advice of an advisory board, but I cannot regard it as adequate to be told that it is all right from the standpoint of parliamentary control to spend any sum of money provided that some advisory board agrees with the Government that it should be done. As a parliamentarian I should regard that as of only incidental interest. It is nice to know that some advisory board has agreed about something, but the board is not responsible to Parliament, and our purpose here should be to secure parliamentary control.

Therefore, if our new Clause 8 were accepted we should like to see Clause 9(4) eliminated. If, on the other hand, the Secretary of State is not convinced by our arguments on parliamentary control generally, I should not wish to see Amendment No. 53 carried because that control, inadequate though it is, would be better than no control at all.

Our Amendment No. 55 would require the inclusion in the Minister's annual report of all items of assistance of more than £1 million. This is simply another safeguard. In a sense, it would not be needed if the earlier Amendments were adopted, because we should already be informed of items over £1 million; but it would even then be convenient, I suggest, to have them all listed in the annual report so that one could see the whole picture and know how things had gone during the year. If, on the other hand, the earlier Amendments are not accepted,

it will be more important than ever to ensure that at least in the annual report we know what the Government have been up to in the preceding year. The IRC annual reports, for example, gave all that sort of information, and I regard it as the minimum information which should be made available to the House.

I hope that the Minister will accept the new Clause or, if he will not accept it as drafted, give an assurance, as he did on the previous new Clause, that the Bill as it stands will be strengthened to provide for a much more effective measure of parliamentary control than is provided for at present.

Mr. Adam Butler: Hon. Members who served on the Standing Committee and my right hon. and hon. Friends on the Front Bench are well aware of my deep concern about the desirability and the need for Parliament to have a greater say in deciding whether, for what purpose and how much public money should be spent. Historically accountability to Parliament and continuing and effective monitoring of public money in the public sector are vital. The Sixth Report of the Expenditure Committee, of which I was fortunate enough to be a member, has made a number of important recommendations in support of accountability and monitoring—for example, the wider use and publication of White Papers and greater and closer scrutiny of expenditure by Select Committees on behalf of the House.
However, those matters are not significant in this instance. The question behind the Amendments is how, within the important requirements of administrative efficiency, simplicity and speed. Parliament can have a say in initiating expenditure. I said in Committee that I thought it was intolerable that Ministers should have complete freedom of action without restraint. I moved and reluctantly withdrew Amendments in Committee requiring projects of £10 million or more to be subject to the affirmative resolution procedure. That indicates to my right hon. and hon. Friends and the Opposition that I have sympathy with the principle behind the Amendments. However, I have already indicated in Committee that my preference is for a larger sum of money. Therefore, having withdrawn my Amendments in


Committee, it is difficult for me to support the Amendments now before the House.
A compromise must be found. There must be some freedom of action to the Executive in the same way that there is in business. I am not convinced by the arguments which suggest that the project approach is unworkable. I look forward to hearing any persuasive arguments which my right hon. Friend can produce. If one can in business require subsidiary companies to work to budgets on certain projects, and to assess whether the project comes within the limits of the capital expenditure which is required to cost those projects in the usual way, I see no reason why the same approach should not be used by the Government Departments. If it is impracticable, then one has to look at the alternatives.
The system of tranches is probably one of the few ways in which one can work. I welcome Amendments Nos. 61 and 62, which increase the frequency of tranches and the amount of money within each. It is a question of judgment whether the figures my right hon. Friend will propose are the right ones. This would meet the point made by the hon. Member for Glasgow, Craigton (Mr. Millan) about Concorde in that one would have required so far five tranches or four tranches of the £100 million proposed.
If a project approach is not possible, then the tranche approach is necessary. I do not share the objection of the hon. Member for Craigton about the rôle of the advisory board. If freedom of action is to be given to the Secretary of State he should use it, making use of the full range of advice which will now be at his disposal from the advisory board. The advisory board must be drawn from a wide range of industry, commerce, and finance using men of great capability. In no circumstances can I see it operating as a rubber stamp for the Secretary of State's activities.
It is therefore a welcome change for the Secretary of State to know that in the event of his undertaking action with which the advisory board disagrees, this action will be publicised and certainly can be the subject of a debate. Other Amendments aim to reduce the time limit and, regardless of anything to do with the Common Market, I

believe we are dealing with financial assistance some forms of which would themselves involve long timescales. If is is right to give this financial assistance, and in view of the need for some elements of certainty and continuity which is frequently stressed by business men, I see the five-year period ending in 1977 as being the time which can reasonably be allowed for expenditure to take place and for initial results to be assessed.
I have made my feelings clear on the subject in regard to parliamentary control and I look forward to hearing at what I hope will be an early hour what my right hon. Friend has to say on the subject.

Mr. Skeet: I am very concerned about this series of Amendments and I hope that my right hon. Friend the Secretary of State will accept certain proposals that we have put to him about public accountability for expenditure of more than £1 million. The argument in Committee was that if a grant was authorised the Comptroller and Auditor-General and the Public Accounts Committee could examine it, but unfortunately that would be in retrospect. Parliament should have control of such large grants, but I believe that control should be written into Clause 8 so that we can influence the Government before the decision is made. In other words, it is much more advantageous to control the course of events, to control the tiller, than simply to rely upon our colleagues in Select Committees to say, "We are very sorry. The Government have made a serious mistake and nothing can be done about it. Take out your handkerchief and weep."
I can provide my right hon. Friend with a satisfactory example which occurred under Section 7 of the Coal Industry Act, 1971. That Section authorises the Minister to give directions to the National Coal Board to dispose of certain assets. Because of an Amendment which several of us put down and which was reluctantly accepted by the Government, it was necessary to move by way of Statutory Instrument which would have to be approved by Parliament.
If in the disposal of assets—and there could be a number of them—it is thought wise under that Act to come back to the House for final sanction, when we are dealing with large sums of more than £1 million, I should have thought that


it would not be unreasonable to suggest that Parliament should have some say in such instances. I therefore suggest that Amendments Nos. 13 and 20, referring to investments in excess of £1 million in relation to both Clauses 7 and 8, would be realistic, rational and prudent.

7.30 p.m.

Larger sums are generally covered by specific Acts. The Rolls-Royce example is well known and another is the establishment of the aluminium industry by the Labour Government. What I am concerned about has been the growth over the years of the methods of dealing with appropriations by the House. Grants have been made under the Appropriation Acts to deal with significant and important cases—in 1966, for example, the granting of no less than £33 million to take up rights under British Petroleum. It will be recollected that in 1914, 1919 and 1932 Acts were passed to authorise the Government to take a majority shareholding in British Petroleum, but there was no specific Act, other than the Appropriation Acts, to enable the Government on this occasion to take up rights.

I am not suggesting that that should be a form of control in this instance. What I am suggesting is that where there are substantial capital outlays, Parliament should have control under a specific Act. We have a few examples. The Rolls-Royce (Purchase) Act, 1971, is a case in point. If my right hon. Friend says that he would be concerned about the delays likely to be incurred, I should be unable to agree, because that legislation went through in practically no time as the House appreciated its signficance. The ICL was dealt with under the Science and Technology Act, 1965, while Harland and Wolff and UCS were dealt with under the Shipbuilding Industry Act, 1967. The British Aluminium Co. Ltd., Anglesey, and Aluminium Metal Ltd. were dealt with under the Industrial Expansion Act, 1968.

Now we move to the next series with millions of pounds in grants in substantial though less significant sums covered by collective legislation—the Industry Bill. But I am suggesting that each investment over the size of £1 million should receive the approbation of

the House through a Statutory Instrument, and I do not think that that is an unfair request.

I am particularly concerned about the criteria in Clause 8. If we are to have an Executive given these enormous powers when in a position to dispense millions of pounds, probably £30 million to £40 million on any one venture, all it has to take account of under Clause 8 is not just the employment situation, but whether the Treasury will approve—and over the years the Treasury has approved of many things of which many of my hon. Friends and I would not approve—whether it will simply be to the benefit of the economy, whether it will be in the national interest, whether the money cannot be raised by any other means.

With terms as broad as those—"in the national interest" is a phrase that no one has attempted to construe—or simply to the benefit of the economy, while I do not suggest that my right hon. Friend would set up a whole line of hotels throughout the country and, on the contrary, I am certain that he would use this trust in an extremely responsible manner, one has to look ahead, and my right hon. Friend will have successors and what they might do in his place is beyond my immediate contemplation.

I should like to know the way in which my right hon. Friend visualises using these provisions. He has wisely come some way to meet us in reducing tranches. He has gone a long way, but not far enough. There will be a substantial base from which he can operate. Then he will have an opportunity of having two additional tranches. Will he share with us his thinking on the use of these moneys?

We are entering a period of expansion, with a vast increase in money supply. I noticed that the Financial Times mentioned an annual rate of 27 per cent. There is no shortage of liquidity in the economy, and if there is a sound investment, money from the market will come towards it. Over the years my experience has been that if a venture is particularly risky, or the State does not favour it, it does not get any money.

We have also found that Government ventures such as Herbert and Ingersoll have gone into liquidation, it having been appreciated from the beginning that those


companies would not get going. They can be classified as risky ventures. Will my right hon. Friend indicate whether this money will be available not merely in the United Kingdom but to help finance operators on the Continental Shelf? Will it also become available to the nationalised industries—the National Coal Board and the British Gas Corporation, for example? I know that they can raise money through their own Acts, but may they be given supplementary moneys through this Bill?

I have dealt with the criteria, but perhaps my right hon. Friend will tell me what industries he intends to consider. We have dealt today with the machine tool industry, and brief references have been made to the shipbuilding industry. I expect that those two will be carefully examined—but are there any other industries that he wants to look at and give large sums to for reconstruction, development or any other purposes that he has in mind?

I also draw my hon. Friend's attention to the fact that now we are entering Europe we must be careful to be on the right side of the law in connection with Articles 85 and 86 of the Rome Treaty—the competition articles. We must be careful not to do anything that will lead to a substantial distortion of trade. If we too heavily subsidise a company which may have been prodigal over the years it will be hard on those companies that have looked after their funds sensibly if they find that they face competition from a State-subsidised company in the same field. That is very likely to happen, until we reach the stage when profits are made only if very large subsidies accompany them.

I should have thought that the whole policy of Europe must be to encourage competition, to try to get rid of unnecessary distortion of trade, and not to encourage our industry to become too dependent on the State. My right hon. Friend probably knows that the chemists in Sweden were anxious to be taken over by the State, and in fact were taken over. My right hon. Friend probably also knows that a new organisation has been set up in Italy, known as GEPI, which is another IRI. The whole purpose is to teach the long queue of applicants coming from industry to take over. It normally happens that the economy is run in such a

way as to make it difficult for private firms to operate, and then the State says, "I will offer you money and take you over." That means that we have one State monopoly after another.

Is my right hon. Friend prepared to see the private sector expand in the United Kingdom, or does he wish it to contract? From my knowledge of him, I am certain that he would not wish to see it contracted. But is he not introducing in Clause 8 a provision which will lead to general industry in the private sector becoming too dependent on the State? How will he wean it from those large sums of money being offered as an ecouragement for it to do this and that? How will he make it more independent and more self-reliant?

It is a bit comical in a sense that these matters are being raised when the Opposition are suggesting that there should be a State holding company. It would not require many modifications of the Bill, when it has become an Act, to put that well and truly on the Statute Book and enable the Opposition to take over large sectors of the economy, including banking and probably insurance. The right hon. Member for Birkenhead (Mr. Dell) has himself said that with the provisions already in the Bill he would be able to do everything he wants.

The tranches could be reduced even further. With the buoyancy of the economy and the amount of money reticulating through the City of London, there is no shortage of money for good economic projects. If they are required, money will be found for them. I have not the foggiest idea what my right hon. Friend has in mind, but he may be thinking of such things as UCS, which may be helped through certain difficulties, or a small number of rescue operations. He must be aware that for the North Sea, which has been particularly risky, there has been no shortage of funds, not merely from the English market but from the United States and elsewhere. The Iranians are now participating with BP in North Sea development. Risky as it is, money has been flooding in from all quarters, and there has been no need to ask the State for expensive subsidies.

My right hon. Friend is very knowledgeable on these matters, and will be cognisant with the FCI and FCIC, merchant banks and the various consortia


which are available. If a project is any good, it will receive full support.

If my right hon. Friend wanted to assist industry and push its development, he could recommend tax-free holidays to my right hon. Friend the Chancellor. Perhaps I should be entirely out of order if I went beyond that point.

I have been particularly concerned—this is why I am suggesting that we should have some form of parlimentary control—because we have seen a Conservative Government follow the concept of the buying of shares to obtain a stake in industry, when we consider that other methods can be used. This power has not been used very much over the past two or three years, but it was in some of the earlier Acts. We have followed the process which was initiated by the Labour Government. I believe that that is not in accordance with our thinking, and is totally unnecessary.

The right and power of the State to acquire shares in the private sector has appeared in the Industry Act, 1971, the Rolls-Royce (Purchase) Act, 1971, the Atomic Energy Act, 1971, the Local Employment Act, 1972, and now this Bill. Before then, we had the Shipbuilding Industry Act, 1967, and the Industrial Expansion Act, 1968. This is the evolution of a process which we on this side do not like. We think it is superfluous. We do not think the private sector likes it, and we do not feel that the public sector is particularly efficient. If my right hon. Friend is to ask for powers of this nature, which are inimical to the interests of industry and the country, he should let us have some parliamentary checks when investments take place. It is not unreasonable to suggest for the purpose a Statutory Instrument to be brought on late at night when those who are interested could recommend what they considered to be appropriate.

7.45 p.m.

Sir Harry Legge-Bourke: I have not had an opportunity of speaking on the Bill before. I shall be as brief as I can be in speaking to the Amendments.
I had understood all the way through that one of the main objects of the Bill was to ensure adequate parliamentary

control. The present Session and the previous one have taught us one lesson very clearly:that it is becoming increasingly difficult for Parliament to exercise the measure of control over Statutory Instruments that it should. On the negative procedure the opportunities have diminished terrifyingly in the present Session, because if a Government have a big legislative programme—and the present Government certainly have that—inevitably the right of an hon. Member at any lime to put down a Prayer and make sure that it will eventually be given an opportunity to be debated becomes very slender. With the Opposition's new programme, the muddle from Tolpuddle, which will involve a great deal of legislation, I see no more prospect if they ever return to power of their being any greater rights for back benchers to put down Prayers and have them debated than has been the case in this Parliament.
Therefore, where parliamentary control is said to be desirable—and I am delighted that my right hon. Friend the Prime Minister and my right, hon. Friend the Secretary of State for Trade and Industry, have always said that that is one of the main purposes of the Bill, and is what distinguishes it from the old IRC set-up—we must be very careful to ensure that in appropriate cases we have the maximum capacity to operate the affirmative procedure.
The figure of £1 million is fairly impressive by any criterion. It is obvious that in Committee my right hon. Friend took careful note of some of the pressures that were brought to bear. By Amendment No. 60 the limit is to be reduced from £250 million to £150 million. Amendment No. 61 makes possible four occasions rather than only two for consideration to be given to raising that limit. By Amendment No. 62 we reduce from £150 million to £100 million the amount that any single increase can be. A number of my hon. Friends have put their names to Amendment No. 25, which would reduce to £50 million the maximum by which on any one of those four occasions it would be possible to increase the total.
At least it appears that those who served on the Standing Committee, to whose work I pay tribute, have become increasingly cognisant of the fact that a large amount of taxpayers' money will be


put at the Government's disposal and that therefore there should be proper parliamentary control over it. I cannot see how we obtain that without affirmative Resolutions having to be passed by the House at appropriate times and without a limit based on the amount of money that can be voted at any one time, Even now, despite inflation and the erosion of the value of money over the years, I still believe that £1 million is quite a sum. I believe it a reasonable sum to have.
I note those who have put their names to Amendment No. 13, and I hope that my right hon. Friend will also do so. Apart from my hon. Friend the Member for Oswestry (Mr. Biffen), who has faithfully sat through today's debate, there is the vice-chairman of the 1922 Committee, my hon. Friend the Member for Wycome (Mr. John Hall); my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), a secretary of the 1922 Committee and chairman of another very important party commitee; my hon. Friend the Member for Horsham (Mr. Hordern), the chairman of the Finance Committee as well as a member of the executive of the 1922Committee; and many others of my hon. Friends.
Although I speak here only for myself and I do not pretend to attempt to express the collective views of the 1922 Committee or any other committee, I have to take note of the measure of influence which those hon. Members have in various specialised spheres of activity in the political consideration given to these matters by the Conservative Patty. I hope that my right hon. Friend has given full weight to the important support given to Amendment No. 13 and that he will find a way of accepting it. Whether he can go quite as far as some of the later Amendments, No. 25 in particular, I am not sure. I feel that the wind is in the right direction judging by the Amendments which he has tabled.
When I look back at some of the things which happened in the days when the right hon. Member for Bristol, South-East (Mr. Benn) was Minister of Technology, when I recollect some of the exchanges which took place between him and the then Director of the Industrial Reorganisation Corporation and think of the fears that were expressed by some very notable businessmen trying to serve

the Industrial Reorganisation Corporation as best they could, and the misgivings they had about the attempts of the right hon. Gentleman to interfere in matters of which he had no knowledge at all, I shudder to think of the way in which the Bill might be used if there were ever to be another Socialist Government.
This is a Socialist Bill by ethic and philosophy. I fear that it is the most grievous piece of legislation introduced by the present Government so far. I hugely admire the other legislation which has been introduced by my right hon. Friends but this Bill I find obnoxious for many reaons. At least, however, I recognise that there is a streak of enormous compassion running through it. I realise that there are some areas desperately needing the help which the Bill can give. It was only for that reason that I was prepared not to vote against it on Second Reading; it is only for that reason that I shall not vote against it on Third Reading. I believe that these thoughts are shared by many of my hon. Friends.
I hope that at least we shall live true to the doctrine which was said to be running through the Bill—namely, that it was a better way of ensuring adequate parliamentary control than was ever obtainable under the old Act involving the IRC. If that be the case, for goodness sake let us implement it properly and give Parliament the power it needs. To ask for an affirmative Resolution on anything over £1 million is a modest demand and I hope that my right hon. Friend will concede it.

Mr. John Mendelson: Perhaps I could best help the Secretary of State by saying immediately following the speech of the hon. and gallant Member for Isle of Ely (Sir H. Legge-Bourke) who is Chairman of the 1922 Committee that I do not regard this Bill as a Socialist Bill. I would like that put on record as firmly as possible. I do believe that it has a number of useful provisions but that is not really the reason why I intervened.
I want to say a word or two about an Amendment that has not yet been mentioned but which is being discussed with this group and which tries to reduce the period during which this assistance is to be given. I hope that those who tabled the Amendment will be trying to


justify it. It is in my opinion a most unreasonable Amendment yet surprisingly it has been tabled by a number of hon. Members who know a good deal about industry.
It ought to be common ground that any major project or scheme of reorganisation, to be worth while, will in many cases require at least a period of development of two, three, four or five years. Unless it is intended to wreck the provisions of this Bill which so many people in our regions want, I cannot understand how hon. Members opposite can support a provision which would cut down the time so severely. I hope that those who are keen on this will not press it too far because it would create the gravest disappointment in many parts of the country including parts of their own constituencies. There are many people throughout the land who have argued with Ministers that these provisions are vital for their areas.
My second point concerns parliamentary control. The Government would help the House and those who support the basic considerations of the Bill if they were to meet some of the demands for improved Parliamentary control. It would in no way weaken the Government's hand; on the contrary it would strengthen it. One point not mentioned so far, arising out of our Concorde experience, is that one of the great weaknesses which the House has allowed to developed is the absence of opportunities to compare a scheme costing a great deal of money during the development stages with alternative schemes on which the same sum of money might have been expended.
I do not go along with many hon. Members who have been far too severe and sweeping in their criticism of the House of Commons in recent years. I do not agree with some of the criticism that has been made, as if Parliament allowed almost all large-scale expenditure to go through without taking a searching look at it or without having a real interest in it. That criticism has been overdone and it has done Parliament harm because a lot of people outside who do not understand what opportunities there are in this House to control the Executive have believed the criticism wholesale and have sometimes repeated it to us asking,

"How can you allow all control to go from the House of Commons?"
Hon. Members know that this is wholly untrue, a misrepresentation and exaggeration of the real position. None the less, I do agree that there are far too few opportunities, while a project is being developed, to compare it with alternatives and perhaps to call a halt. The Government would strength the position of Parliament, which must be their concern as it is ours, and at the same time would strengthen their position in administering this Measure if they were to meet the many demands that have been made for improved Parliamentary control over the administration of legislation and the large amounts of money which the Government propose to spend.

Mr. Normanton: Before I take up the theme I wish to pursue relating to new Clause 8 and the Amendments coupled with it, as a back bencher I want to pay my respects and offer congratulations and thanks to my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) for the way in which he has forcibly, powerfully but accurately reflected the deep-seated feelings of back benchers like myself, certainly on this side of the House. That does not for a moment ignore the equally deep-seated feelings of all hon. Members over the urgency of trying to find solutions to this problem of the development areas. I said in Committee that the crunch came with the solutions in Clauses 7 and 8, and the crunch sticks in my gullet.

8.0 p.m.

Although I have put my name to many of the Amendments which we are debating with new Clause 8, I recognise that none of them will find their way to the Statute Book as a result of this debate or any decision which may arise from it. I regret that because I cannot find much satisfaction in the wording of new Clause 8. My view is summed up very clearly in the Amendments to which I have put my name and those tabled by my hon. Friends. I earnestly hope that my right hon. Friend will give clear and firm assurances about the lines he feels driven to follow, perhaps by way of tabling Amendments to the Bill in another place.

I do not need to remind my right hon. Friend that in Committee I tabled


Amendment No. 82. I noted the criticisms and comments made by my right hon. Friend the Minister for Industrial Development in response to it. Therefore, the drafting has been altered in Amendment No. 59 to meet some of those criticisms.

The purpose of Amendment No. 59 is twofold:first, to lay down criteria by which the selective assistance will be given; and, secondly, to involved Parliament in decisions on how the money should be spent. I cannot help but think, painfully, in connection with the second objective, of the total inadequacy of the time and facilities which we have to examine the question of expenditure. This is a Bill of fundamental importance—fundamental in principle and in financial terms. It will not be overlooked that at this late stage on a Friday, with about 14 hon. Members in the Chamber, we are dealing with a mass of Amendments, all of which clearly express the deep concern of hon. Members about the adequacy or inadequacy of a fundamental piece of legislation.

In Committee the Minister agreed that criteria were desirable in theory but impossible to frame in practice. But, as my hon. Friend the Member for Gillingham (Mr. Burden) said in Committee, we can do the difficult immediately; the impossible takes a little longer. I do not accept, and never will accept, that it is impossible to formulate criteria. If it was impossible to formulate them in a Bill of this magnitude, the Bill should never have been presented.

There are few circumstances in which selective Government aid to private industry is justified. There are strong arguments against giving Governments wide discretionary powers in this field, as in any other, during peace time. My right hon. Friend preferred the second approach of providing substantial safeguards within a general framework of powers. It is true that a number of safeguards have been accepted by my right hon. Friend as a result of the discussions in Committee. But there were no safeguards in the Bill as it was presented and debated on Second Reading. The power to take equity has been limited, but I regard that safeguard as being totally inadequate

The form of the Secretary of State's annual report was spelt out in Committee, although it was not in the Bill as originally drafted. The Industrial Development Advisory Board is to be made a statutory body. That, too, was not spelt out in the Bill. But is what has been done adequate to deal with such a massive piece of legislation—massive in principle and even more massive and open-ended in financial terms? I unhesitatingly say that, on the question of financial criteria and financial constraints, Clauses 7 and 8 are so open-ended as to be totally unacceptable.

The Government have been fortunate, and I would say that they have been far-sighted, in attracting someone of the calibre, integrity and national respect and regard as Mr. Gordon Richardson to be chairman of the advisory board. No doubt, under the direction and guidance of my right hon. Friend the Secretary of State, the board will be made up of extremely eminent, responsible, public-spirited and experienced men, although it will no more be the fount of ultimate wisdom than the officials of the Department of Trade and Industry.

However, boards can be changed over the years. If we had a Government which wished to use Clause 8 in a very different way from that in which the present Government intend to use it, the board could change substantially. Nor will improved accountability be of much help because it will be a considerable time after the event. I endorse what my hon. Friend the Member for Bedford (Mr. Skeet) said when he pointed out the irrelevance in terms of time and effectiveness of the provisions in the Bill and said, "All we can do is to take out our handkerchiefs and weep". I suggest that all we shall be able to do will be to hold a graveside requiem, finishing with "Amen". This is not the kind of institutional procedure which I expected this House to follow when I became a Member two years ago.

This is an extremely serious problem. Anyone who has read the Report of the Expenditure Committee knows that that point is made abundantly clear in it. In its conclusions about principles and criteria for assistance, the report argues:
Clarity of purpose has frequently been absent. The Government must consider objectively whether an industry needs to be


sustained and, if so, what should be its size and location and the length of time and total cost of such support.

It is precisely to avoid or at least to limit those deficiencies of past practices that I put down Amendment No. 59. Without spreading my remarks unduly and repeating what has already been voiced from this side of the House I would urge my right hon. Friend once again to give thought to the fundamental principles underlying that Amendment and I earnestly hope that he will give an assurance that it will be reflected in an Amendment in another place.

The second aim of the Amendment is to involve this House in decisions under Clause 8. With some considerable reluctance I am bound to be acutely conscious of the fact that my hon. Friend the Member for Oswestry (Mr. Biffen) and I both voted against Clause 8 in Committee. We did so firmly convinced of the total inadequacy—indeed, the definite dangers—which were built into Clause 8 in the form in which it still stands. I withdraw not one single word of what I said on that point.

I submit that paragraphs (c) and (d) of my Amendment would not involve overnight crises, and I am quite certain, therefore, that there is no necessity whatever to give the Executive the discretionary powers which are contained in Clause 8. After all, we have had situations of
maintaining the productive capacity of an industry essential to national defence
upon which this House took urgent action, and would be prepared, I believe, and regardless of which party might be in power, similarly again to respond urgently, as was done in the Rolls-Royce situation. I see no reason why this sort of situation need be covered by blanket powers which are precisely what Clause 8 contains in its present form.

In paragraph (b) of my Amendment, it could be said, we provide for the Upper Clyde Shipbuilders situation. There again, there are in Clause 7 powers under which UCS could be adequately and appropriately dealt with. After all, UCS occupied debating time, or, at any rate, if not the debating time of this House, many, many hours, and in this Parliament alone. So I do not see that those two situations need be provided for, and in-

deed, they are specifically excluded from the coverage of Clause 8.

Therefore, I very much and earnestly hope that my right hon. Friend the Secretary of State will accept the desirability of introducing where possible what my hon. Friends have indicated, the many ways in which we consider it realistically possible to introduce Parliamentary decision-making for which, as Clause 8 stands, to all intents and purposes it provides totally inadequate opportunity.

Finally, I would point out that paragraph (d)(i) and (ii) of my Amendment has been slightly altered to meet genuinely valid criticisms of the original text, and paragraph (b) covers the particularly difficult cases. It is generally agreed that it may be justifiable to give selective Government assistance to industry suffering from subsidised foreign competition, and I admit that it is difficult to write that kind of situation into a Bill without conflicting with international treaty obligations, but I refuse to accept that it is impossible to do so. The second criterion is sufficiently wide to allow for such cases, and, in my view, the Amendment allows for reasonable and useful criteria.

8.15 p.m.

I put down the Amendment; I have concentrated my thoughts and the time of the House on it, being firmly convinced, as I am, that there must be a much tighter drawing of the criteria contained in Clause 8. When I reflect and the House considers that we are in effect debating the very heart and core of this Bill, Clauses 7 and 8, whose titles both include the word "financial", let us just reflect very briefly, and as unemotionally as we can in the circumstances, what we are opening the gate to. The sum has been variously computed as being between £800 million and £1,000 million. I submit that this Bill is to all intents and purposes in practice open ended, and that any device, any realistic method based on experience in industry, which will impose some realistic constraints, whether they be in the form of criteria or whether they be in the form of limitations on the powers of the Secretary of State, should be incorporated into the Bill.

I earnestly repeat my request to my right hon. Friend and to his right hon. Friends that they look with real, deep concern at the anxiety which is being


expressed from these benches, and reflect it in another place in the only form which I know, would make this Bill and its provisions acceptable to us.

Mr. Crouch: I had not intended to intervene in this debate, but I listened with interest to the views of my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) and I heard him expressing views which came very much from the heart as well as the head, and he accused my right hon. Friend of introducing a Measure which could only be described as a Socialist Measure I know that such a feeling exists on this side of the House and has existed since the Bill was first presented to the House. I do not happen to share that feeling. I have given a great deal of thought to this and exercised myself considerably about it.
I know that the purpose of the Amendments now before us is in some way to restrict the open-endedness of the Bill, particularly in Clause 8. We are not thinking so much of Clause 7 concerning regional policy as of the offer of assistance from the Government to industry in its wider problem, namely, modernisation and the protection of industry from the cold winds which today blow from the great world of competition. It is a perfectly valid argument economically to say that the measures which the Government are proposing are wrong and could have deep-seated disadvantages for us. I understand that argument but I cannot accept it.
I hope my intervention will be brief because I know that there are hon. Friends of mine who want to voice their sincere concern about this. In Britain today, however, our industry is facing the problem of structural change as we switch to the new processes, as we try to gear ourselves up into a much more modernised state to cope with the competition which is approaching us as we enter into the very much larger market of the European Economic Community.
Aid is necessary to assist the process of the private sector getting itself ready for this greater effort. The hon. Member for Penistone (Mr. John Mendelson) does not agree that I am now talking Socialism. I believe there is a necessary interaction between the Government and all sectors of the industrial economy. To assume that the Government are purely

concerned with fiscal measures and with creating an economic climate in which we can all proceed by active competitive means is not in itself enough; it is to assume something that these days is not completely true.
All Governments in modern industrial societies are concerned with the whole health and the whole progress of the industrial economy, and while it is one thing to take such steps as are necessary on the fiscal and taxation side to prepare the way for progress and to encourage risk-taking in the private sector, it is also necessary for Governments today sometimes to step in and encourage the process to change.

Mr. Bruce-Gardyne: My hon. Friend is addressing his remarks in the context of these Amendments to Clause 8, but he will accept that one of the purposes of Clause 8 that we know relates to Upper Clyde Shipbuilders. Does my hon. Friend refer to Upper Clyde Shipbuilders as an example of progress, of adaptation to change and of the process of modernisation?

Mr. Crouch: I do not regard Upper Clyde Shipbuilders as being within the content of Clause 8—

Mr. Bruce-Gardyne: But it is.

Mr. Crouch: I see it as coming under Clause 7, as a regional matter. I do not see it as a case where we are thinking entirely of modernisation, of direct and immediate assistance to an area, a region or an assisted area. I will accept to some extent that there is behind the advance of aid being given to Upper Clyde the notion that there is some positive intention for modernisation to take place. It is a generous doling out by the Government of money not simply to provide employment, but to provide employment for the future.
I agree that in this case there were exceptional circumstances which persuaded the Government to take a step which I feel they had no alternative but to take, and I supported them. But I remind my hon. Friend that there are other cases where we are seeing this inter-action between Government and the private sector of industry, and this is not properly illustrated by Upper Clyde. It was better illustrated by the Rolls-Royce situation, which perhaps


caught up on the Government rather too quickly for our own comfort.
We in this country are not alone in thinking of this problem and of Government intervention. There is not one of the present six countries in the Common Market in which Government intervention does not take place in ways other than mere taxation. I have been amused in the last few days, and particularly today, to hear references from both sides of the House to the suggestion initiated by the German Government to the Commission in Brussels that perhaps there was something not altogether right in the regional measures contained in the Bill. Coming from the Germans, that is rather amusing. The Germans have a policy, and a very positive policy, of regional assistance in areas which they actually term promotion areas and which cover one-tenth of their country.
In addition, I have received complaints from people in some of our largest industries of the German Government's intervention in ways other than regional help to assist industries going through a period of difficulty. One such complaint related to the German Government's stepping in to pay half the wages bill of an industry which at one time was not able to sustain itself. The British complaint was that this was unfair competition. However, I will leave that point as it could probably have been better considered under the earlier group of Amendments relating to the EEC. I only make the point that we are not alone in having to consider how the Government can give aid, whether the Government should give aid and whether in so doing a Government become Socialist in their application of policies.
Labour hon. Members, and there are few enough of them here now—[Hon. Members:"Two."]—would agree that their objective in aid to industry would be to control the private sector very positively. That is not my intention. My intention is to enable the private sector to flourish, and to continue to flourish, to retain all the advantages of competition, of incentive, of inventiveness and hard work that we associate with that private sector. I would not seek to control the private sector by attaching too many strings to the aid about which we are talking. Some of the restraints suggested

in these Amendments would give us the worst and not the best of both worlds. We have to take a measure of risk when we are considering this type of aid to industry.
I was one of those who, I must confess, felt that it might have been better if the administration of such aid to industry were removed from the Secretary of State and his Department. I was rather sorry to see the IRC go so quickly. It was not perfect by any means but at least it was one stage removed from this hothouse and one stage removed from Whitehall itself. I was not one of those who distrusted its ability to make wise decisions, any more than I would distrust the decisions of the board of a nationalised industry or of a private sector company.
We have established and always can establish from this House sufficient checks and balances to satisfy ourselves that things are proceeding in the right direction. What we have to do with this Bill is to ensure that not only is our aid sufficient but that we have sufficient checks and controls—not overmuch check and control, but just sufficient—to ensure that we are not throwing away public money.
We have made mistakes in the past. Under the last Administration, particularly in the area of investment grants, a company had only to make out its claim sufficiently to satisfy the Department concerned and it got an investment grant, and that was the end of the matter. It was important, and it will be much more so in future, that any aid, whether very small or very large, should be watched continuously. We shall later discuss those checks in the Bill provided for in the Committee whereby we shall have regular accounting to Parliament.
My present concern is that there are written into these Amendments certain restraints which will make it difficult for the Bill to be applied with full success. We have to trust my right hon. Friend the Secretary of State. He is coming to the House every day. He is available for questioning. The Secretary of State and my right hon. Friend the Minister for Industrial Development can be reached at Question Time on the Floor of the House. Questions can always be


put down to them expressing anxiety about any direction in which aid is being used or perhaps misused, or to express the view that we are not satisfied that the aid has produced the necessary expansion, the creation of jobs and so on. But I would be sorry to see my right hon. Friends as constrained in the administration of the Bill as is suggested by the Amendments.

8.30 p.m.

My hon. Friends are sincere and absolutely resolute in their views in opposition to the Bill, particularly Clause 8. I appeal to them in saying that today it is not only industry which is changing but also the whole climate in which it has to operate in our democracy.

We have to be a little more relaxed about some of the older shibboleths about Government participation in the changes we are facing. A degree of more sophisticated thought is necessary. Just as in the past the old soldier would have said that the Army could proceed on its own, the more modern soldier will say that the Army cannot proceed without an air umbrella above it. The simile can be applied to industry, particularly the service industries. They also require a form of aid umbrella behind them and they need to be helped by the Government. It should not necessarily be regarded as something which should drive out all incentive and competition from the private sector if the Government were to hold up such an umbrella.

This has not happened in Sweden. We often look to Sweden and admire Sweden because of the continued growth of her economy and GDP at a rate higher than that of Britain. In Sweden the extent of nationalisation is considerably less than in Britain. But the Swedes have had this interface between the State and the private sector for a long time and have learned to live with it. They have learned the full force of competition in industry. I am speaking of a country I know extremely well. My hon. Friends look upset at the mention of Sweden, which is usually mentioned by the Opposition Front Bench.

We should at least give consideration to the philosophy as we think of the full meaning of the Bill. The philosophy that satisfies me is that I do not believe for one moment that this is an open door

which will allow the present Administration or any other to take greater control of the private sector. I have not heard of one leading industrialist in Britain saying that.

Mr. Skeet: My hon. Friend has referred to Sweden. An article in the Economist of 18th December, 1971, said:
Without the robust profits from the state tobacco monopoly and the giant LKAB iron mines, Statsföretag would have been deep in the red last year.
Will my hon. Friend recognise his fatal mistake?

Mr. Crouch: I have heard that reference made earlier in the debate. I cannot comment on it because I do not know the truth of that one. But I know of a number of other instances of successful co-operation in Sweden. I am thinking of an industry I know personally and which I used to advise which has linked with the Swedish Government on atomic power.
I conclude on the question of what I call the philosophy which enables me to accept the Bill as a Measure which is not inhibiting to the philosophies that keep a person interested and competitive in the private sector. It will be in the public interest very often that a private sector factory or industry must be kept going because of the necessity to retain the jobs. Sometimes, however, economic forces may show that that factory or industry simply should be closed. As I have said, I have found examples in West Germany at present where the Government have intervened to keep jobs going and have paid half the payroll bill. Economic forces can today be produced by international pressures on a very much wider scale than we have thought of previously. Very often international economic pressures on other countries are produced by Government intervention. There is also intervention such as marginal cost selling or price subsidies and interventions by Governments.
We simply cannot allow our major growth industries to go to the wall by not ourselves intervening to protect them.

Mr. Normanton: I was quickly roused from my dreams when my hon. Friend suddenly referred to the growth industries. Dare I ask him whether he would list those industries which are growth industries? I have still to find anyone who


has been able to say today that an industry is a growth industry without having to eat his words tomorrow.

Mr. Crouch: If by that my hon. Friend means that there is no growth in British industry—

Mr. Normanton: I did not say that.

Mr. Crouch: Some industries are growth industries but they are not growing as fast as they would wish because of the very pressures I am talking about. One in particular is the chemical industry.

Mr. Bruce-Gardyne: Shipbuilding.

Mr. Crouch: Yes. There are plenty of other examples. This tendency is growing in other parts of the world. That is what the Bill is about. My hon. Friends should be a little more generous to my right hon. Friends on the Front Bench who are prepared to sink their pride in the Bill by adopting a philosophy which is very much bigger for the betterment of British industry rather than the old shibboleths to which my hon. Friends are clinging.
By pocketing our pride on the Government side of the House, my right hon. Friend the Secretary of State is offering a chance to see that we get through some of the difficulties in British industry. There are all sorts of pressures and interventions from competition abroad. Only in this way can we give our industries a chance to break through, to develop and to achieve the sort of competitive stature and position that will be necessary so that they become growth industries again.
For the next two years investment in the chemical industry will still be declining. World markets are saturated. The problem is the same around the world. But this is not a time to let such an industry remain on a plateau, if not decline, because whilst one industry sits on a plateau of non-progress, reduced investment and expansion, and reduced research and development—as is happening in British industry today—one sees other nations such as Japan moving ahead fast. Are the Government to sit back saying, "We are clinging to the old shibboleths. We are great old Tories"? The great advantage of the Conservative

Party is that we never are great old Tories when it comes to the crunch. We have always been a party capable of accepting change. [Interruption.]
My hon. Friends are obviously tired of what I have to say. [Hon. Members:"No."] I know why they are not tired, and I suspect an ulterior motive. They are rendering me almost speechless.

Mr. Normanton: I am grateful to my hon. Friend for allowing this intervention. I was hoping that he would reach the conclusion which many hon. Members reached in Committee and try to give voice to the desirability of establishing certain criteria by which aid should be given, one of which was the application of the principle of viability, cost-effectiveness and so on. If that is what my hon. Friend wants, perhaps we might be getting somewhere.

Mr. Crouch: Of course I do. I do not want my right hon. Friends to place their bets anywhere other than on a winner.

Mr. Bruce-Gardyne: Upper Clyde.

Mr. Crouch: My hon. Friend keeps referring to Upper Clyde. It sticks in his gullet and has upset him for a long time. Other hon. Members constantly mention Rolls-Royce.
In the Bill we are looking ahead and giving ourselves a chance to regroup and reform and to regenerate British industry. It is for that reason that I ask my hon. Friends to think as largely about this as do I and certainly my right hon. Friends on the Front Bench.

Mr. Biffen: It is a pleasure to be called to speak after my hon. Friend the Member for Canterbury (Mr. Crouch). I assure my hon. Friend of one thing only, because I do not want my contribution to be elevated into a philosophic discussion on the Bill. I want my contribution to be related to the Amendments.
It will not do for my hon. Friend to proffer the analysis that those of us like my hon. Friends the Members for Isle of Ely (Sir H. Legge-Bourke), for South Angus (Mr. Bruce-Gardyne), for Cheadle (Mr. Normanton), for Bedford (Mr. Skeet), myself and countless others within the Parliamentary Tory Party whom we represent by our presence this evening are small-minded and do not have the contemporary breadth of analysis of this


problem which my hon. Friend happily possesses.
I rebut that with one quotation from the editorial in Management Today of July, 1972, which on the whole I should have thought would be a source which will have some impression upon my hon. Friend:
At present, and almost by accident, the rate of subsidy to private industry must be by far higher than any Government has ever endorsed in peacetime:the deficits of the nationalised industries alone (which, of course, represent a direct subsidy to the private sector and partly represent the latters' buoyant profits) are running at a grotesque level. And nobody is directly accountable for the justification, explanation, use or misuse of these gigantic amounts. That is no way to run a business or a country—and the price will be paid by the next generation, not of products, but of people.
I do not know who wrote those words. The editor of Management Today is, I believe, Mr. Bob Keller, who I should think would be the last person who could be slotted into the nostalgic wing of the Tory Party.
The point which has been made throughout this afternoon is a perfectly reasonable one. It is not nostalgic. It is one which is very much directed to relating our present and prospective legislation to what we believe are the realities of the industrial, economic and social situation and the way in which they react and interact upon each other.
I wish to clarify whether, when we make a speech on these Amendments, it is our one bite at the cherry, Mr. Deputy-Speaker. If this were so it would inevitably mean that the speech from the Treasury Bench became disjointed, because our only opportunity of clarification would be by means of intervention. I seek your confirmation, Mr. Deputy Speaker, that although I have in my name Amendments Nos. 13, 20, 23, 24 and 25, this is to be a composite speech and there will be no subsequent opportunity on any of these Amendments for me to comment upon the acceptability or otherwise of the reply given by the Front Bench.

Mr. Deputy Speaker: The hon. Gentleman's fears are correct. He can make only one speech upon all those Amendments.

Mr. Biffen: They are not my fears, Mr. Deputy-Speaker. They may be the

fears of everybody else present. This composite speech will necessarily be more protracted than would otherwise have been the case. So that the matter is beyond all possible doubt, may I inquire whether that is also the case in respect of Amendment No. 23?

Mr. Deputy Speaker: I understand that Mr. Speaker is agreed to allow a separate Division on Amendment No. 23, if that is desired.

8.45 p.m.

Mr. Biffen: Again I seek your guidance, Mr. Deputy Speaker. Does the fact that there is to be a separate Division mean that, when the Division is called, one is able to make any comment?

Mr. Deputy Speaker: No, certainly not.

Mr. Biffen: It will probably be for the convenience of the House—[Interruption.] Does the hon. Member for Glasgow, Craigton (Mr. Millan) wish to enliven the proceedings?

Mr. Millan: I am sorry. I was just saying that this meeting of the 1922 Committee is by our courtesy as the authors of new Clause 8.

Mr. Biffen: Rarely has such an indifferent midwife produced so bouncing a child.
Amendments Nos. 13 and 20, which are the most closely related to new Clause 8, would provide for the affirmative procedure to be applied to projects of £1 million or more. This matter goes direct to the heart to the whole issue of accountability.
Those of us who served on the Standing Committee were much indebted to my hon. Friend the Member for Bosworth (Mr. Adam Butler) for the Amendments he moved on this issue. He chose the figure of £10 million but he was then, so to speak, no-balled by the wording of his own Amendment. My right hon. Friend the Minister for Industrial Development said:
…the proposal to insert the words 'by order made' would necessitate the preparation and making of a Statutory Instrument in respect of each case of assistance throughout the regions, however large or small it may be.
To avoid that technical knockout, both the hon. Member for Craigton and I have


made proposals which, I hope, will make the proposition infinitely more acceptable to the Government than it could have been at the time of the debate in Committee, and I hope that my hon. Friend for Bosworth—he is not now in the Chamber—will feel disposed to lend his support to new Clause 8.
There is virtue in the passing reference to the Treasury which is preserved in Amendments Nos. 13 and 23. It is rather fashionable nowadays to disparage the Treasury, which has become, I suppose, one of the favourite whipping-boys of all parliamentary debate. Seeing so distinguished a Treasury Minister as my hon. Friend the Chief Secretary at the far end of the Front Bench, I take that as a further reason for making those remarks.
The Sixth Report of the Expenditure Committee, which is beginning to feature more in our debates as we become more aware of its recent publication and of its relevance to what we are discussing, had this to say in paragraph 268:
…in the control of public expenditure the Treasury has special obligations. We believe that these should be "—
these are words I enjoy—
firmly asserted where public investment in the private sector is involved.
The House naturally wishes to share in the monitoring process. I understand this to be the basis of the new Clause. The figure of £1 million is not unreasonable. As my hon. Friend the Member for Isle of Ely said, we are not talking in terms of the petty cash of industrial measures and public expenditure. The more it reflects upon this issue, the more will the House be concerned, I am sure, about some of the implications of the extent to which we shall have parity of consultation with other bodies which the Government will have to consult in the execution of their policy.
I wish in no sense to touch the wounds of Common Market controversy, but it is a fact that moneys which will be voted under Clause 7, and more particularly under Clause 8, will certainly impinge upon the significance of Article 93 of the Treaty of Rome, which provides that the Commission
shall, in co-operation with Member States, keep under constant review all systems of aid existing in those States.

I am not now objecting to that. I am merely saying that that is the kind of world in which the House will be living after 1st January. There will be constant monitoring of the various forms of aid offered, whether of regional significance under Clause 7 or of more general significance under Clause 8.
All the evidence adduced by the Select Committee shows how unsatisfactory was a good deal of the documentation and the monitoring of public expenditure. I hope that my right hon. Friend will not take it amiss—I know he will not—if I say that his answer in Committee on this issue was fascinating for some of the insight which it gave into the Department's thinking. I refer to the Department's thinking because the view which I shall now quote has to some extent already been mirrored in remarks made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
My right hon. Friend, explaining why this kind of more detailed monitoring could not be accepted by the Government, said:
If it is known what criteria the Government are employing in the assistance they give, it would then be possible for the firm's rivals to make deductions about a number of matters which the firm requires to be kept a commercial secret."—[Official Report. Standing Committee H, 11th July, 1972; c. 560.]
That is true. It is at the heart of the dilemma running through all these issues.
We have to come back to the basic proposition. The Bill will convert a large number of taxpayers, our constituents into conscript shareholders or conscript debenture holders in these various institutions, and we must have regard to that. The Select Committee itself spent a good deal of time mulling over that dilemma.
In paragraph 272 of its Report, with reference to the much-debated incident of the aluminium smelters which has been prominent in so many speeches today, the Select Committee said:
In the case of the aluminium smelters, the inability of Parliament to discover either the very large amount paid out in investment grants or the unit cost of electricity supplied to the smelters must greatly weaken any serious attempt to judge whether the public expenditure was justified.
There will always be a clash between the recipients' requirement for confidentiality and the anxiety that value for


money is being secured on behalf of taxpayers. We have to strike a balance. The balance of the £1 million as being the size of project for the affirmative procedure errs overwhelmingly to the disadvantage of the managerial classes. The major beneficiaries will not have to expose themselves to the normal disciplines of the money market. We are not being ungracious to the industrial élite. We are doing not much more than our tax-paying constituents could expect of us.
I hope that new Clause 8, if that is the only thing on which a Division is permitted, will find its way into this legislation. I would prefer my right hon. Friend to say that whilst advising the rejection of new Clause 8 he intends, either here or in another place to write Amendments Nos. 13 and 20 into the Bill. I should not quibble whether such Amendment came from the Opposition or from the Government. It is an issue of major significance and the House should not delude itself otherwise.
I now turn to Amendments Nos. 24 and 25 [Interruption.] I appreciate that my hon. Friend the Member for Tyne-mouth (Dame Irene Ward) is anxious about the length of my speech.

Dame Irene Ward: It is very long.

Mr. Biffen: It is, and I am not in the least apologetic. I have to make several speeches rolled into one.
Amendments Nos. 24 and 25 go to the heart of the sums which will have to be voted under Clause 8. If the Amendments were accepted the provisions of Clause 8 would be substantially modified. My hon. Friend the Member for Cheadle made it amply clear why he felt the most profound misgivings about Clause 8. I was delighted to have his company in voting against the Clause in Committee. The Tory conscience needed more able and distinguished keepers than my hon. Friend and I, but in the circumstances we had to do the best we could.
The Clause is without question one of major consequence for the way in which the Conservative industrial policy will be expected to develop. We delude ourselves if we think that it is a hurried one-off operation. My hon. Friend the Member for Bedford said he had dis-

covered in his analysis of the Italian situation that an organisation called IRI had become a major provider of funds to the private sector.

Mr. Skeet: It was called the State infirmary.

Mr. Biffen: I am well aware of the Financial Times article to which my hon. Friend is referring. He is very perceptive in his comments on the matter. It is a myth to think that Ministers will look around trying to find companies into which they can put money. They will have to hold them back. Companies will be beating a path to the ministerial door. These are the circumstances in which we have to ask ourselves "What is the background to this?" This is the significance of trying to scale down the sums of money.
The background is that anybody who wants to raise money can do so on the money market. I shall quote three examples of companies which have recently sought to raise money in the City of London. There was Mother care, a chain of retailers of baby carriages and similar merchandise, which sought £13·2 million; the subscription rolled in at the rate of £142 million. There was Gough Cooper, builders, which wanted a mere £2·835 million, and managed to notch up applications for £355 million. There was Anthony Gibbs, a private bank, which wanted a mere £3·132 million and received applications for £257 million. Make no mistake, there is money looking for investment. It is not looking for the kind of investment which we as politicians in our superior wisdom think are the activities to which our people should be devoted.

9.0 p.m.

Whether we are better judges of the maximisation of our national resources than the broader judgment of the market, I know not. I can only enter my modest reservation that, on the whole, the politically-productive direction of funds is likely to be less motivated in the long run than market-orientated funds. If that sounds ideological, so be it, but I would be happy at some stage, although not this evening, to monitor the rates of return which have been earned on those resources which have been politically directed and guided. I hope that my right hon. Friends will not regard the


Amendment as in any sense flippant or destructive. It touches upon a central issue.

I now turn to Amendment No. 23, to which the hon. Member for Penistone (Mr. John Mendelson) referred. There are two fairly simple reasons. I shall deal with the controversial or partisan reason first. The proposed terminal date in Clause 8 could be our contribution to the next Government, and we have to ask ourselves whether we are so enamoured by Clause 8, so conscious of its potential, that we want to retain it so long as to put it into the hands of a subsequent Government, which could be a Labour Government. That is a perfectly reasonable view to take. A number of my hon. Friends believe that Clause 8, in the hands of a Labour Government, would be used for a scale of intervention far in excess of anything that they would be prepared to tolerate under a Conservative Administration. I am presenting the option that the Clause, which in any case is meant to have a terminal date, should have a terminal date which would make it fall within the likely span of the present Parliament rather than run over into the next Parliament.

There is a second and more substantial reason. The recent Select Committee report on public expenditure in private industry dealt with an area which, if not wholly uncharted, is still substantially unknown. Yet the sums which are being deployed in that area are massive. In the circumstances, it would be no act of humility if Parliament limited its ambitions under Clause 8, in terms of duration and the expenditure involved, so that we could reflect, and above all reflect upon the immensely valuable report from the Expenditure Committee.

We may—perhaps I am as guilty as or more guilty than most—occasionally take refuge in theoretical and philosophical propositions. On the whole, I apply myself fairly practically to these propositions. However, we delude ourselves if we think that the arguments which we are having this evening are some kind of Conservative Party extra-mural conference about the direction of the Tory Party's philosophy. It is about the hard and practical issues of whether vast sums of money being voted out of Government resources, essentially for private administration, even

begin to match up to the requirements of this day and age, or even begin to match up to what is called for from us if we are to be effective and efficient monitors and to stand in the best traditions of Parliament.

Mr. Bruce-Gardyne: After that extremely powerful speech by my hon. Friend the Member for Oswestry (Mr. Biffen), making in the most dramatic and effective terms the case for more effective parliamentary scrutiny, I do not wish to detain the House for long because he made the point so very effectively. But I am bound to say that I think it unsatisfactory that we should be discussing a matter of this vast importance, with huge implications for all our constituencies, at 9 o'clock on a Friday evening. That is not a satisfactory form of parliamentary scrutiny. For long periods in our debate the Opposition Front Bench has been totally unoccupied. I do not criticise the hon. Members for Glasgow, Craigton (Mr. Millan) or Swansea, West (Mr. Alan Williams) for that, because I fully appreciate that they are being expected to hold the fort single-handed. It is a consequence of the circumstances in which the discussion is taking place, and that is very undesirable.

Mr. Alan Williams: My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and I are not here under any compulsion. We happen to be here because we care about the Bill. I remind the hon. Gentleman, however, that many other people working in this place are here by compulsion and it is probably no satisfaction to them to know that they are being held here by a bunch of sham revolutionaries who will not vote anyway.

Mr. Bruce-Gardyne: The hon. Gentleman had better wait and see. He is jumping to preliminary conclusions. I made it clear that I was not suggesting that he and his hon. Friend the Member for Craigton were here by compulsion. I said that they were holding the fort in circumstances which I understood from their point of view. But this is not a satisfactory method of parliamentary scrutiny of an extremely important part of the Bill—indeed, the crucial part.
I have learnt a certain number of things about the Bill today and I find them instructive. For example, I gather that assistance to UCS comes under


Clause 7. I was ignorant of that. We were told by my right hon. Friend the Secretary of State that the assistance was under Part II of the Bill but, as far as I am aware, we were not told in Committee, on the Floor of the House or in the White Paper that it was under Clause 7 that assistance was to be given. This demonstrates graphically the need for more satisfactory parliamentary control and scrutiny, as suggested in new Clause 8 and the Amendment.
I regret that I did not hear my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) but I am glad to hear that he drew attention, and rightly, to the strength of the anxiety on this side of the House about Part II of the Bill. That is another reason why I think it unfortunate, to put it no more strongly, that we should be discussing the Bill at 9 o'clock on a Friday night.
I also learnt for the first time today that one of the motivations for Clause 8 is precisely to deal with the anxieties incorporated in the second part of Amendments Nos. 19 and 7 which we discussed earlier, namely, the danger that our assistance under Part I or under Clause 7 involves robbing Peter to pay Paul—assisting a firm in one constituency to the damage of another firm in another constituency. The answer we got about this was that Clause 8 was needed in order that the gravy allocated in South Angus could be compensated for by gravy in Oswestry, to ensure that the gravy allocated in South Angus did not cause damage in Oswestry. After that, however, one would need further growth in South Angus to ensure that the differential was maintained. I would hesitate to say that it was a matter of
Oh, what a tangled web we weave,
When first we practise to deceive!
The snowballing effect of the types of incentive proposed in Part II can therefore be seen. The need for more effective parliamentary scrutiny can hardly be more clearly demonstrated than by the fact that there is no mention at any point in the Bill of Upper Clyde Shipbuilders. My hon. Friend the Member for Canterbury (Mr. Crouch) suggested that I had Upper Clyde Shipbuilders stuck in my gullet but I beg him to understand that here is a case involving assistance of £35 million-plus, an open-ended subsidy. It is a specific project which we

know will be dealt with under the Bill. We do not know what more will be forthcoming. There are no further limitations on my right hon. Friends to indulge in Upper Clyde activities in other parts of the country in other industries under Part II. We must therefore concentrate on what we know.
My hon. Friend the Member for Canterbury may be convinced that the provisions of Part II and of Clause 8 are essential to enable British industry to surge forward into the last quarter of the twentieth century and to face the wider dangers of competition in the enlarged Community and to the challenges of a swiftly changing world. But the one project about which we know. Upper Clyde, can hardly by the remotest stretch of the imagination be said to coincide with this objective. Inevitably in the context of the Amendments one is bound to ask what sort of purposes will be fulfilled by Clauses 7 and 8 which make it undesirable that there should be the difficulty of parliamentary scrutiny over successive individual allocations of taxpayer funds which is suggested in the Amendments.
My right hon. Friends on frequent occasions have suggested that Clause 8 is the high technology Clause. It is said that with that Clause high technology will be assisted. But when it came to the point in Committee we were told that ICL would not be dealt with under that Clause. I suspect that it is not the high technology Clause but the low technology Clause. Even if the particular form of assistance for Upper Clyde does not come under Clause8, it is an Upper Clyde Clause and I cannot help wondering whether that is one of the reasons for some reluctance to accept a degree of parliamentary scrutiny as suggested in the Amendments.
Perhaps if we had the affirmative procedure we would also have a trail of bizarre investment propositions coming before us. My hon. Friend the Member for Oswestry touched precisely and very correctly on this point. The comment has been made also that if the affirmative Resolution procedure was required for any assistance over £1 million, my hon. Friend, the Minister for Aerospace would be coming back every day with a new affirmative Resolution for Concorde. I would not weep all that many tears over


that, although with the present rate of progress he would come not once but twice a day.

9.15 p.m.

My right hon. Friend emphasised in the discussions in Committee that we shall have extensive parliamentary scrutiny at Question Time. Does he regard, say, 20 Questions answered orally every two weeks and covering the enormous field of responsibilities within the Department of Trade and Industry as extensive? That is not a very comprehensive form of scrutiny. Then, of course, there will be the Select Committees, including the Public Accounts Committee. But these are involved in retrospective scrutiny. One has only to look at the Public Accounts Committee's report on Concorde in the 1964–65 Session and study the strictures the Committee made at that time about the project to see how little comfort can be obtained from this form of post hoc scrutiny. At that stage the taxpayer has already been committed and it may be extremely difficult to extract him in mid-course.

Mr. Crouch: I agree that the post hoc investigation by a Select Committee does not help in the administration of aid and assistance. But my hon. Friend is misleading the House by suggesting that Clause 8 will provide help for industries like Upper Clyde and a whole miscellany of industries like that. The Clause does not say that. We are talking of financial assistance likely to benefit the economy or likely to be in the national interest which should be provided but which cannot appropriately be provided in other ways by the Secretary of State. My hon. Friend is misleading the House in trying to scare us into thinking that there are a whole lot of Upper Clydes which will claim money. New Clause 8 is the worst of both worlds. My hon. Friend is asking Parliament to step in and stand over the Secretary of State, and I believe that that would cause assistance to be maladministered.

Mr. Bruce-Gardyne: My anxiety about Clause 8 is that we do not know what it will be used for. As my hon. Friend the Member for Oswestry pointed out, there is no shortage of entrepreneurial capital for commercial enterprises with good prospects. One's interest is there-

fore aroused about what are the precise purposes of Clause 8. I remind my right hon. Friend of the statement by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in the Second Reading debate on the Industrial Expansion Bill which I quoted on Second Reading and which is surely relevant to these Amendments. He said on that occasion on behalf of the Conservatives:
We object passionately to these large powers being given to the Government by way of an enabling Bill.…We brought forward individual Bills and, if necessary, we shall bring forward individual Bills again.…"—[Official Report, 1st February, 1968; Vol. 757, c. 1599.]
We are not asking in the Amendments for individual Bills. We are saying that if there are individual tranches of financial assistance exceeding £1 million under Part II at least the affirmative Resolution procedure should be invoked.
I reinforce what my hon. Friend the Member for Oswestry said about Amendment No. 23 which raises a rather separate point. My hon. Friend produced a cogent argument for limiting ourselves to a trial period in these uncharted waters. He also introduced what he described as the more controversial argument of the desirability of eliminating temptation from the next Parliament on any speculation one might have about the political texture of that Parliament.
I suggest to my right hon. Friends that there is perhaps an additional reason for accepting Amendment No. 23. My right hon. Friend the Minister for Industrial Development has frequently said that we need not worry about the Bill in this respect, saying that it is not the sort of thing that the Labour Party would want to use for its nefarious purposes and that it would not be suited to those purposes. From time to time in the House we have seen the way in which the attitude of a party in power can make it somewhat embarrassing or awkward to deal with the misbehaviour of the opposition party when it gets back to office. There is an unfortunate tendency for words uttered in government to be repeated against one when one is in Opposition.
If the Government were able to accept Amendment No. 23, at least they would be recognising and affirming at this stage, so that there would be no dubiety about it, that whatever the powers provided in


Part II, they would be powers which could be entrusted safely if entrusted safely at all, only to a Government of Tory persuasion.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies): At this point we are plainly touching on the heart of the Bill. I have listened today with interest and admiration to the arguments made so lucidly on both sides of the House. With your indulgence, Mr. Speaker, I should like to express a word of regret that it was not possible for me to be present throughout the Committee proceedings. Unfortunately, my kind of activity made it difficult. However, I assure hon. Members that I have carefully read what went on. If I may say so without offence, I thought that the Committee was of great interest and that it ventilated an enormous number of issues of fundamental importance to the consideration of the Bill.
Earlier in the discussion there were many admissions of sinners repenting, perhaps particularly on the Opposition benches, one or two attitudes and principles observed during the Labour Government. There was a certain anticipatory repentance of sins on my part by one or two Opposition Members who seemed to think that I, too, had fallen into the repenting sinner class. I can only tell them that that is not so. I am an unrepenting sinner still, if indeed that be my characteristic.
I have not yet believed, and I doubt that I ever shall, in the utility of using the public purse as a means of transferring resources from rich and prosperous operations to unsuccessful and loss-making operations. Generally speaking, it proves to be both defeating and damaging to both sides. Thus, I do not in any way subscribe to those various anticipatory comments. That seems to evoke a smile from the hon. Member for Penistone (Mr. John Mendelson), but I assure him that my statement is made from the heart.
Therefore, nothing in the Bill is argued with my support in the sense of believing that the Government should turn their back on the principle of reinforcing success and adopting instead a kind of easy going attitude to the thousand and one concerns and people who, throughout this

and all other countries, are to be found ready to make the most of an occasion of a soft touch. It seems to me evident that Clause 8 strikes at the very heart of the Bill. My hon. Friend the Member for Oswestry (Mr. Biffen) said that it was a Clause which gave him profound misgivings; I assure my hon. Friends and hon. Members opposite that there is certainly no intention in my mind of becoming the soft touch that I personally deplore.
Clause 8 none the less provides what I regard as essential, without offering the many hostages to fortune that would be implicit in a manifest change of attitude, and drawing it up has presented a baffling problem. However, while still adhering firmly to the basic philosophy in which I believe, I think that there are and always will be cases when, for one reason or another, the Government will find it essential to take action to support industries or individual concerns for reasons which in realism are compelling. I have never doubted that.
Part of my unrepenting sinner attitude is that, looking back at what I have said over many years, including the years that I have had the honour to serve the House, I find that I have never failed to say that there were instances when, despite the depth of my philosophy, there were cases which defied its application. Therefore, a provision such as Clause 8 is essential.
This section of our debate has profoundly ventilated problems of accountability and I should like to spend some time on that, although in due course I will return to the questions asked by my hon. Friend the Member for Cheadle (Mr. Normanton), who was greatly concerned about the setting of adequate criteria to guide any activity under the Clause. I will deal with parliamentary accountability, but there are questions, which are some little distance from it, of the positive level of money flow required to sustain the activities to which I have referred and the period of time over which they might be sustained.

9.30 p.m.

New Clause 8 and its attendant Amendments put down by my hon. Friends would require the Government to ask the House for an affirmative Resolution in respect of any item in which £1 million or more was to be expended in order to


maintain the principles outlined in Clauses 7 and 8. Having listened carefully to the debate it seems to me that the key point occurs in relation to Clause 8 and not Clause 7; the greater absorbs the lesser in this case, and the issues involved in Clause 7, with their consideration of regional problems and the whole method envisaged for seeking to redress the imbalance between different parts of the country, are obviously treated by the House as being in a very different category of consideration from those related to the more widespread problems of national activities, covering more than merely regional problems.

I should therefore address myself more closely to Clause 8, because that seems to contain the nodal point.

Mr. Bruce-Gardyne: I put it to my right hon. Friend that if Upper Clyde assistance came under the provisions of Clause 7 it was a prime example of the kind of assistance in respect of which the House needs closer scrutiny that it will obtain under the terms of the Bill.

Mr. Davies: That may be so, but I draw my hon. Friend's attention to the fact that at the moment we are talking in relation to the Govan Shipbuilders of the future and not of the past. The intention may be to handle this within Clause 7 but no action has yet taken place because the Bill is not law. No precise decision has been made, although it is probable, as it is a strictly regional operation, that it would be undertaken under Clause 7.
Reverting to Clause 8, I would point out to those hon. Members—notably my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke), who spoke with much emotion and very convincingly about his preoccupations with this problem—that it is entirely understandable that Parliament should seek to be involved in issues which, by their very nature, are bound to provoke the most sensitive feelings, particularly among hon. Members on this side of the House but also among some hon. Members opposite.
I hope that hon. Members will bear with me. The problems are very great. They arise, first, because setting the kind of monetary level that is proposed in the new Clause and the Amendments involves

the assessment of a number of Resolutions which would need to come before the House. In terms of my brief experience in Parliament, that poses a very real sanction. It is not just a question of accepting the 20 or so cases to which my right hon. Friend referred in Committee, although that is a fairly accurate assessment derived from experience with the Local Employment Acts.
Hon. Members will understand that once the Government have undertaken a commitment in this respect they cannot afford to be wrong; they will have to submit every case that might involve more than £1 million. Once that obligation is undertaken the commitment can become seriously greater. That implies a problem, in terms of the time of Parliament. It would be extremely difficult for Parliament and for the Administration to allow itself as much time as would be required.
In the nature of things the whole of such operations needs to be carried out to a large degree in absolute secrecy and confidence, but they also often need to be carried out with absolute urgency. When we are dealing with problems such as that to which my hon. Friend has referred—Upper Clyde Shipbuilders—and where these issues are involved, the decisions to be taken will find the greatest difficulty in meeting the requirements of the House, in terms of the time that it can make available for such conclusions.

Sir Brandon Rhys Williams: I have been listening to the debate with close attention—as I have listened to the debates all day. If grants of about £1million—perhaps a little more or less—were thought to be not suitable subjects for parliamentary consideration, how could taxpayers be confident that there was no waste? If I am right in believing that this House has a special responsibility for taxpayers' money, how can hon. Members tell constituents, "We are confident that we have done all that is possible to prevent the waste of your money"? How can I convince my old ladies in South Kensington, who are living on small fixed incomes, that the Government are not squandering what they are paying in tax?

Mr. Davies: I appreciate my hon. Friend's intervention, and I shall come to the point that he raises, but I was


concerning myself then with the difficulties in bringing before Parliament for what we might call almost prior scrutiny—at least, scrutiny before commitment—a large number of individual proposals.
I had thought and hoped that it would be the view of those who were intimately concerned with the Bill in Committee that the more important aspect of the problem that might have appealed to them was the guidance to be given to the Government on the policy by which they administer the law that they will then have at their hand. My right hon. Friend had already conceded one or two important propositions for strengthening that very part of our reference to Parliament which reviews most carefully what has happened. I accept the comments about the relative imperfection of retrospection as regards that specific sanction, but the new Amendments I have put down, with their greater emphasis on appearance before Parliament for it to look at what has happened and then to authorise the next stage, constitute an important time during which there can be a positive intervention in the administration of the law that the Government have. I still hope it will be found that that kind of intervention will be the most powerful from the parliamentary point of view.

Sir H. Legge-Bourke: I am grateful for what my right hon. Friend has said so far. Before he completes his argument, could he illustrate a little more clearly than appears from the text of the Bill how he sees Clause 9 operating with the Industrial Development Advisory Board? To what extent will it operate on very much the same lines as the IRC with regard to obligations to Parliament? To what extent does he see the board asking him to make a statement to the House under subsection (4)?

Mr. Davies: As I see it, on any occasion when the board dissented from my decision it would require me to declare to Parliament that there was such disagreement. That would be a positive sanction of Parliament. I also attach great importance to the annual report which I should be required to make to Parliament. That report, in which I should have to go in considerable detail into the administration of the Act, would give a powerful opportunity. It should not be ignored

that the responsibility of Ministers to Parliament and the way in which the Act is administered in Parliament are themselves powerful forces.
Looking back over the past two years of administering what at times is the most difficult operation in Government, the attribution of industrial development certificates, I am very conscious of the degree to which the non-attribution of a certificate gives rise to intervention of a kind which forces the Minister concerned to discuss, either directly on an individual case, or very publicly in Parliament in a case or principle, his reasons for refusal. Therefore, I do not discount, as I think the hon. Member for Glasgow, Craigton (Mr. Millan) did a little at the outset, this answerability on individual issues as a powerful factor in relation to the administration of the Act.

Mr. Bruce-Gardyne: Surely there is this distinction between the application of the IDC procedure and the selective assistance under Part II of the Bill in that the firm which has been refused the IDC is well aware of it and complains through its Member of Parliament and my right hon. Friend is answerable for this. But the firm liable to suffer because its much more incompetent and derelict competitor is enabled to undercut its pricing through selective assistance under Clause 8 may not know about that until it is too late.

Mr. Davies: I do not think that is the case. The truth is that we are constantly faced with the awareness of individual companies within a given industry of the advantages which others have and they do not. I would not give a great deal of credence to the thought that there would be a complete ignorance about those who might be in the state to which my hon. Friend refers.

Mr. Ridley: Surely if my right hon. Friend refuses an industrial development certificate that is the cause of the discontent. If something is granted under Clause 8 then everyone who receives the grant will be happy but it does not meet the case of parliamentary accountability because this House will wish to know what grants have been made in its name with its money?

Mr. Davies: I agree. The issues to which my hon. Friend the Member for


Cirencester and Tewkesbury (Mr. Ridley) referred are ones which broadly speaking are caught up, I would hope, in the retrospective reviews which would be considerable in the light of the Bill. The more immediate issues might I hope be caught up, particularly with refusals, by the immediate intervention of hon. Members on behalf of the party refused. In general I would firmly hope and intend that the provisions of the Bill do meet very strongly the demands of parliamentary accountability.
I am hesitant to launch myself into provisions which I can see will cause immense parliamentary difficulty in terms of time and which I must straightforwardly confess would, from the point of view of the interests of administrative control, also prove to be extremely embarrassing. It has occurred to me, and I revert to something I said earlier, that there is a considerable distinction between Clause 7, which is primarily a regional vehicle, and Clause 8 which is a national one. In connection with the regional activity it seems probable that the number of individual issues will be much greater but their size will not be so large. There is evidently in relation to these operations a need to try to ensure, as I am sure all hon. Members would agree, the maximum of regional answerability and regional delegation over the provisions of Clause 7.
Clause 8 would primarily have regard to major and national level industries widespread throughout the country and I undertake to the House, in the light of the debate, to consider by what means those could be brought forward in the form for which the House has asked. If I could find the right means of doing that I could introduce the necessary provisions in another place. I wonder whether the House would be kind enough to take my assurance that I will go into that most carefully and will also accept my assurance that it is with reluctance that I must say that to try to take up new Clause 8 as it is or the Amendments that go with it would prove exceedingly difficult.
A word now on the issues revolving round criteria, to which reference was made by my hon. Friend the Member for Cheadle. My right hon. Friend the Minister for Industrial Development wrestles

lengthily on this subject of criteria, as he has made clear in Committee. He and I were very anxious to find a means of dealing with this, but I must tell my hon. Friend that to find something which was not simply an open door in terms of criteria or alternatively something which was not so tight as to become an impediment to carrying forward the arrangements envisaged proved to be impossible. My hon. Friend's Amendment No. 59 illustrates the difficulty to which I refer. The proposed subsection (1)(b) of it refers to
maintaining the productive capacity of an industry which suffers from an unexpected and markedly unfavourable shift in its trading position due to circumstances outside its control".
If that were written in the Bill, it would be an open invitation which would be most difficult to refuse—far more difficult to refuse than the provisions of the Bill. Therefore, I commend to him the difficulty of trying to draft a criterion which will be effective without being so impeding to the purposes envisaged as to be entirely nugatory.

9.45 p.m.

My hon. Friend the Member for Oswestry strongly submitted that we should agree to the curtailment of time envisaged in Amendment No. 23. He gave two major reasons to which my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) added another. The first was that it would afford a very useful vehicle for the Labour Party should it again take power to do all those things which, by nature, and by the declarations which my right hon. Friends and I have made, we clearly would not. I tend to discount that argument. Much reference has been made to the critical importance of the Bill. If it were of critical importance to another party in government to have facilities of this kind, it would have them. It is not by virtue of providing for something which fits exactly the requirements of the present Government that we shall deprive another party in government of its capacity to act as it will.

My hon. Friend's other reason related to the importance which he saw of having experience of the operation of what is proposed, giving oneself time for a rethink and then two years later saying


"I have seen all the strengths and weaknesses of what I have done and I can now act more certainly". But the great problem in dealing with this issue is uncertainty. To add an element of uncertainty of that quality to the negotiating and planning mechanism involved in these issues would deprive what is proposed of all effectiveness. This is why the date now in the Bill was inserted. It was with a view to the day when full entry to the Common Market had been achieved. It was to give a period of manifest certainty to industry in relation to any provision which might be made under this legislation. I should find it very hard to accept the Amendment, which would neutralise the Bill's efficacy from the point of view of the industrial benefit involved in it.

In the light of what I have said, the provisions envisaged in Amendment No. 53 are almost incidental. It was tabled by the hon. Member for Craigton as virtually a supplementary to the inclusion of new Clause 8. I have explained why I find it very difficult to accept new Clause 8 and what I shall try to do to meet some of the concern which has been expressed.

The intention behind Amendments Nos. 24 and 25 is to reduce the total amount of money proposed in the Bill for the purposes envisaged. Of course, the question of assessment of the money requirement in all of this matter is obviously a matter of the very greatest difficulty and I would not pretend for a moment that the total of £550 million split into an original tranche of £150 million followed by four of £100 million is an exact and precise, assessment of what is required, but it must be said that the experience which has been had hitherto in the problems of the kind of support for industry envisaged in Clause 8—I refer to such matters as the whole of question of support for the aircraft industry, of which there has been a good deal of experience, and of support for the textile industry, of which there has been a good deal of experience, and others, too—gives one an idea of the order of size of the sums involved in doing the operations which might prove necessary. I should have thought it very difficult to operate effectively on so small a scale as that envisaged in that Amendment to which I have referred.

I have tried hard in the course of these remarks to cover the many points which have been made during this debate. I am, I repeat, exceedingly conscious of the desire of the House to have the strongest possible activity itself in invigiating the proper use of the provisions sought. I will seek hard to meet it in the way I have suggested. I hope the House will find that what I have proposed in Amendments No. 60, 61 and 62 goes some way to help the situation. However, I conclude where I began by saying that, convinced as I am that the kind of provisions in Clause 8 have to be used with the very greatest reticence, I am none the less sure, that in order to bring about the kind of remedies of our industrial structure which at the moment I see as so necessary, something on the lines of Clause 8 will need to be in the hands of Government as a piece of positive legislation.

Mr. Millan: The Secretary of State has come a little way towards meeting those of us who have pressed the question of parliamentary control. I myself will not enter into the wider issues which were debated between hon. Members on the other side of the House earlier, but I shall stick, in view of the time and other circumstances, strictly to the question of parliamentary control.
I cannot say that I find all the arguments of the right hon. Gentleman terribly compelling. The argument about urgency, for example, was attempted to be dealt with in new Clause 8. I would not say its wording is as felicitous as perhaps one would require if it were accepted and were to be written into the Bill, but at least the problem is recognised and an attempt is made to deal with it. I personally believe that the question of urgency can be caught. If the Secretary of State is to produce some kind of solution for Clause 8 assistance I think he will have somehow or another to find a formula which deals with the question of urgency among other things. Therefore, I do not think that his was a terribly good argument for turning down the new Clause.

Mr. Davies: I apologise for not perhaps having dealt with the matter in the depth which the hon. Gentleman's introduction of it justifies. I think the difficulty about the provisions of new Clause 8 in relation to urgency is that it does


not give reasonable elbow room to deal with urgency and so becomes ineffective to sustain parliamentary answerability. This is a real difficulty that, if one seeks to find words which are to provide for the urgency problem at all, they almost inevitably neutralise the effectiveness of the accountability.

Mr. Millan: I am not sure that that applies. For example, ICL has been mentioned a number of times. I appreciate that that matter is now being dealt with under the science and technology Act and will not be dealt with under Clause 8, but it raises the general issue of the kind of Clause 8 assistance that the Government might wish to give, and there was no particular urgency there in terms of parliamentary control. I know that the right hon. Gentleman had been pressed for quite a considerable time to make up his mind about giving assistance to ICL, the scale of the assistance, how it should be given, and so on, and there was what the Select Committee felt was unnecessary delay in the Government making up their mind. But once the Government had made up their mind it would have been perfectly possible to have had parliamentary proceedings without in any way prejudicing the operation.
I therefore do not accept that in every case by any means, or perhaps in the majority of cases, particularly with Clause 8 assistance, the question of urgency arises. But I appreciate that there are cases where it does arise, and I would not wish so to tie the hands of the Minister that even when he wanted to do something which virtually everyone agreed would be sensible he found himself quite unable to act because of legislative provision.
With regard to confidence, if it is true that there are many cases in which questions of commercial confidence arise and that therefore it is not possible to tell the House what is going on, that of itself makes it rather difficult for hon. Members to put down the parliamentary Questions which the Minister assured us a moment ago was one of the most effective ways of bringing scrutiny to bear on the decisions of Ministers. Under the Clause as it stands many things can happen without hon. Members knowing anything at all about them, so we will not be able to

put down Questions even if the effect is that by putting them down we can adequately scrutinise what the Government had already done. Therefore, although what the Minister said at the end of his remarks represents some progress, and we are grateful for it, I do not think that we have yet had an adequate reply to the points that have been made in the debate.
I am not impressed, either, about the question of parliamentary time. Affirmative orders these days are strictly limited to one and a half hours of parliamentary time, and this ought not to be the major consideration. The vast bulk of Statutory Instruments are now subject to the negative procedure which unfortunately means that in a Session such as the current Session most Prayers are never reached at all. An affirmative order under Clause 8 must have one and a half hours of parliamentary time allotted to it, and that could perfectly well have been accommodated even in a busy Session.
Even if the affirmative procedure were adopted I would not have been particularly worried, although it reduces parliamentary accountability, if in many cases the action was taken and the order was debated a little later—not months later but a day or two or a week or two later—because that would be a fairly effective sanction against Governments behaving perhaps irresponsibly or because they were subjected to unnecessary pressures. Again, therefore, one has to say that although the Minister is obviously trying to be helpful, he is not, in the view of many of us, being helpful enough.
Let me quote something from the report of the Expenditure Committee, which seems to be the fashionable thing to do today. It is an excellent report and I am only sorry that we have not had it for a rather longer time in order to assimilate many of the important points made. In relation to UCS, paragraph 123 states:
The Secretary of State told the House on 28th February 1972:'In contrast with arrangements made by the previous Government, I will see that this vast investment of public money is properly monitored and accounted for'.
The report continues:
The Secretary of State was unable to give us any details at this stage as to how this would be done.

10.0 p.m.

That seems an excellent example of what successive Ministers say. They are always full of goodwill and always promise to do better than their predecessors. As so on as they are told that there is a lack of parliamentary accountability they say, "It is perfectly true about what has happened previously under our predecessors but I assure the House most solemnly that in this case we shall do very much better. It will all be properly monitored and accounted for". That is all said in perfect good will and sincerity, but the common experience of hon. Members is that at the end of the day it does not mean very much, however sincerely the pledge may have been given.

That is one of the reasons why we have attempted to put into the Bill something concrete. The Secretary of State has tried to help by cutting down the extent of the individual tranches for which he is to give help under Clause 8. I have already welcomed that. We have now also had this pledge to try to put something into the Bill before it passes from the other place in specific relation to the selective assistance under Clause 8.

Division No. 331.]
AYES
[10.3 p.m.



Normanton, Tom




Pardoe, John




Skeet, T. H. H.




TELLERS FOR THE AYES:




Mr. John Biffen and Mr. J. Bruce-Gardyne



NOES


Atkins, Humphrey
Hawkins, Paul
Mills, Peter (Torrington)


Baker, Kenneth (St. Marylebone)
Higgins, Terence L.
Moate, Roger


Butler, Adam (Bosworth)
Hornsby-Smith.Rt.Hn.Dame Patricia
Noble, Rt. Hn. Michael


Carlisle, Mark
Howe, Hn. Sir Geoffrey (Reigate)
Peyton, Rt. Hn. John


Chataway, Rt. Hn. Christopher
Jenkin, Patrick (Woodford)
Pym, Rt. Hn. Francis


Clarke, Kenneth (Rushcliffe)
Jopling, Michael
Rossi, Hugh (Hornsey)


Clegg, Walter
Kershaw, Anthony
Royle, Anthony


Crouch, David
King, Tom (Bridgwater)
Shaw. Michael (Sc'b'gh &amp; Whitby)


Davies, Rt. Hn. John (Knutsford)
Kirk, Peter
Speed, Keith


Dean, Paul
Knox, David
Tebbit, Norman


Dixon, Piers
Lambton, Lord
Thomas, John Stradling (Monmouth)


Drayson, G. B. 
Lamont, Norman
Thomas, Rt. Hn. Peter (Hendon, S.)


Eden, Sir John
Lane, David
Ward, Dame Irene


Fortescue, Tim 
Langford-Holt, Sir John
Weatherill, Bernard


Gibson-Watt, David
Legge-Bourke, Sir Harry
Wood, Rt. Hn. Richard


Gilmour, Ian (Norfolk, C.)
Le Merchant, Spencer
TELLERS FOR THE NOES:


Goodhew, Victor
Macmillan, Maurice (Farnham)
Mr. Oscar Murton and Mr. Marcus Fox.


Grant, Anthony (Harrow, C.)
McNair-Wilson, Michael



Haselhurst, Alan

Question accordingly navegatied.

Being realistic, that is probably as much as we are likely to get from the Government. It is a disappointment, but I do not believe that we shall get anything much more satisfactory than that.

We shall want to look very carefully at what is done before the Bill goes to another place and before it returns from another place. Hon. Members on both sides of the House will wish to pursue this matter not only on this Bill but as other Bills come forward raising similar issues, because the whole question of parliamentary accountability is not now adequately dealt with in our legislation or under the procedure of the House.

With those remarks and in view of what the Secretary of State has said, I beg leave to withdraw the new Clause.

Mr. Deputy-Speaker (Mr. E. L. Mallalieu): Is it your pleasure that the new Clause be withdrawn?

Hon. Members: No.

Question put, That the Clause be read a second time:—

The House divided:Ayes 3, Noes 52.

New Clause 9

APPEALS AGAINST REFUSAL OF GRANT

'Any person whose application for a grant or assistance under this Act is refused by the Secretary of State shall have a right of appeal to an appropriately constituted Industrial Grants Appeal Tribunal'.—[Mr. Pardoe.]

Brought up, and read the First time.

Mr. Pardoe: I beg to move, That the Clause be read a Second time.
I shall be brief in presenting the new Clause, and I hope that the Government will state their thinking in equally few words. I almost hope that no other hon. Member joins in, though I suppose I ought not to say that.
In our debates so far we have been concerned with the rights of the taxpayer and how we should control the allocation of the taxpayer's money and see that it is used in the proper way. This new Clause is concerned with the person who is refused a grant or financial assistance. I do not say that the problem here is as bad as it was under Part I, because under Part I there is no longer quite the selectivity that there was, though there still remains considerable discretion given to the Secretary of State. That applies, for example, to Clause 2(5). Under Part II, however, there is great selectivity, and the words "in his opinion" are crucial to the whole allocation of money.
On the Secretary of State's decision substantial public favours will be given. In other branches of government where this is done, we almost always have an appeal procedure. For example, under the Department of Health and Social Security, although quite small sums of money, sometimes pence a week, are involved, we have the full panoply of appeals with, at the end of the process, after the national insurance officer and the rest, an appeal tribunal.
All hon. Members who have had dealings with firms which have applied for development grants and been refused have been brought face to face with the feeling of injustice which that can bring about. One of the reasons is that no explanations are given. The old BOTAC used to give reasons to the Minister but they were not passed on and one could never explain why a person had been refused. In town and country planning decisions, on

the other hand, one may always give an explanation because one has a fairly good explanation from the local authority.
I am not wedded to the specific suggestion of an industrial grants appeal tribunal. Nevertheless I believe that a person who is turned down—there will be hundreds turned down under Part II—ought to be given specific reasons for the refusal and ought to have some sort of appeal to an authority other than the Secretary of State.
I have put the matter shortly, and I suppose that at this hour the House will breathe a sigh of relief to hear me come to a conclusion.

10.15 p.m.

Mr. Anthony Grant: I shall be equally brief in responding to the hon. Member for Cornwall, North (Mr. Pardoe). I echo the hope which he expressed as to the length of this debate. The hon. Gentleman made a persuasive point for the establishment of an appeal tribunal to consider appeals against refusal of assistance. However, the hon. Gentleman will appreciate that the new Clause would relate to all assistance under all parts of the Bill, regional development grants, selective assistance, shipbuilding grants and other matters.
The considerations applying to those different forms of assistance are very different. It is difficult to see how an appeal tribunal could have any rôle under Part II of the Bill as the essence of assistance is that it should be selective and tailored to the particular needs and circumstances of the case. The basic objection to what is proposed is that in effect we would be substituting a tribunal's judgment for that of the Secretary of State, and I cannot see that this would necessarily ensure that an applicant would get a more favourable response or that the taxpayers would get better value for their money, because at the end of the day it must be for the Secretary of State to decide where the national interest lies and how best to use the discretion given to him in the Bill.
We have rightly talked a great deal today about the question of parliamentary accountability. I do not think it would be acceptable to the House or to interests outside if the exercise of these powers were, as the new Clause proposes, to be left to a separate tribunal which


would not be accountable to the House. These are our basic objections. I assure the hon. Gentleman that an applicant who is aggrieved by a refusal of assistance can ensure that his case is fully considered and ventilated. He can approach his Member of Parliament, who can raise the matter with the Secretary of State. He can invoke the Parliamentary Commissioner in cases of maladministration. In practice, the various stages of the parliamentary procedure which exist are more likely to secure justice for the hard case.
I believe I am right in saying that if there is a faulty interpretation of the Statute in some way there is even resort to the courts in the normal way. But by and large, I think that parliamentary procedure is an infinitely better way than the use of a separate tribunal. This is borne out by experience under both the LEA building grant and investment grant schemes. These were both discretionary grant systems in which responsibility for exercising discretion rested firmly on the Secretary of State, who in turn was answerable to the House. Also, the

reasons are given or can be obtainable for a refusal, and certainly we would not wish to change the practice under the new system from that which has prevailed under the old.
For these reasons, I regret to say, although I am grateful to the hon. Gentleman for raising the matter and enabling us to apply our minds to it, that I cannot accept the new Clause.

Mr. Pardoe: I beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave, withdrawn.

Further consideration of the Bill, as amended, adjourned.—[Mr. John Davies.]

Bill (as amended in the Standing Committee), to be further considered upon Monday next.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Murton.]

Adjourned accordingly at eighteen minutes past Ten o'clock.